The Generation Z Buyer: The New Face of Home Ownership

Hello Hampton Roads,

When it comes to the future of real estate and new home buyers, all eyes are on Generation Z (Gen-Z). According to Pew research, the “Zoomer “ generation is characterized by people born after 1996 through the early 2010s. They currently account for about 20% of the U.S. population and by 2030 they will account for 30% of the worforce.

 

 So who is Gen-Z?

They are usually the children of Generation X. They grew up with smartphones in their hands and the internet at their fingertips.  They are known as “digital natives” and spend most of their free time online.  They appreciate new technology and demand quick access to information.  They are the most racially and ethnically diverse generation with 48% identifying as non-Caucasian.  They value diversity, financial stability, and homeownership.

According to Realtor.com’s 4^th Quarter Generational Propensity Report, Gen-Z is now buying up to 2% of homes on the market which is on par with the silent generation (born before 1946) and they are just getting started.  Ninety-seven percent believe they will own a home in the future (43% are planning on buying within the next 5 years) and are willing to buy less expensive homes at younger ages.

Since this group is just entering the workforce, housing affordability is key and they tend to buy in areas where their money goes the farthest:

Table 1: Top 10 Generation Z Housing Markets

You’ll see from the table that the Virginia Beach-Norfolk-Newport News metro-area ranked 4^th with 4.36% of loan originations and a median purchase price of $209,505.00—the highest median purchase price in the top 10. I believe this high share of Gen Z purchases is in part due to the area’s availability first time home buyer incentives and grants which help with the down payment, closing costs, or both. A Lending Tree study shows 86% of Gen Z received some help with the down payment.  In general, this generation starts saving earlier for a down payment and typically puts about 5% down.

What does Gen-Z value in a home?

According to a Homes.com study, Generation Z prefers single family detached homes in diverse neighborhoods in the suburbs or rural areas.  The desired features in a home are a backyard entertaining area, an open concept floor plan, a garage, and hardwood floors.  Interestingly for a digital generation, smart home technology and green features did not rank as high.

In short, Generation Z wants to buy homes and this new wave of home buyers is starting to make their presence felt.  They are the new face of real estate and it’s exciting to see the impact they will have on the market.

Thanks for Reading,

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