Owning a home sounds like a dream, sure, but a majority of Gen Z Americans feel discouraged about whether they can make this sort of lifetime goal a reality. To blame? Housing just isn’t affordable.
While two-thirds of Americans between the ages of 18 and 27 say that homeownership is a lifetime goal, 82% of people in this generation believe that actually buying a home is more difficult for them than older generations, according to a new survey of 1,000 Gen Z adults released today by Realtor.com. Things are so bad, in fact, that 16% of Gen Zers rate housing affordability as one of their top life concerns.
And it’s not just a feeling: Younger generations have been largely locked out of the housing market in recent years because of the affordability issue that’s made worse by a few influencing factors, according to Hannah Jones, senior economic research analyst at Realtor.com. In addition to a lack of new housing inventory, the elevated home prices for existing homes and high mortgage rates mean that homeownership really is out of reach for many would-be buyers, she says.
“It’s really, really challenging to be a first-time homebuyer in this market,” Jones tells Fast Company. “But there are definitely ways to go about it, and creative ways to approach homeownership.”
33% OF GEN Z SAVING FOR A DOWN PAYMENT
That’s because the survey results, while largely showing how discouraged Gen Z feels, did reveal something that Jones finds encouraging: Nearly three-quarters of respondents have already started saving for a down payment. While respondents predict they’ll need about $54,500 for a down payment, which is far less than the $85,000 necessary for a 20% down payment on a home with the national median listing price of $425,000, it’s nearly double the most-recent average down payment of $30,250.
By proactively saving, even if they worry about affordability, this underscores just how much of a priority owning a home is for younger people and that they’re still optimistic it’s possible, provided they save enough money, Jones says. “Even though Gen Z views homeownership as unattainable, they’re thinking about it and saving for it.”
Respondents said they’re interested in dependable ways to grow their wealth or cut costs to save for a down payment rather than betting on the potential for making money from riskier bets on stocks or cryptocurrencies. And they’ll make some sacrifices—like going back home to live with their parents, living with roommates, buying homes with friends if they’re unmarried—so they can overcome that affordability hurdle, Jones says.
MARKET SOLUTIONS NEEDED
But some solutions that will help this generation are far beyond their control: More new homes need to come on the market, including the construction of more starter homes and multi-family homes that are available at different sizes and price points for generations that aren’t yet earning a lot, Jones says.
And while much has been made of the so-called great wealth transfer, in which trillions of dollars will be transferred from older generations to younger generations, would-be homebuyers will benefit more immediately from a dip in mortgage rates. About 80% of home owners with outstanding mortgages are locked in at rates below 6%, so that will serve as an “important psychological boundary” that may help unlock some housing inventory, Jones says.
The national average rate for a 30-year fixed-rate mortgage is currently 6.19%, according to Nerdwallet.
Realtor.com hasn’t yet forecasted mortgage rates for 2026, when it’s possible that they’ll dip below 6%, but that’s coming in the relatively near future and once it does, it will bring a wave of people who are ready to move and will bring more housing inventory to the market.
“Lower mortgage rates will unlock a lot of housing so it can boost housing affordability,” Jones says.