Younger homebuyers' tastes are changing

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Published Date 12/13/2022

It wasn't long ago that demographers reported on how Gen Z and Millenials were all about "experiences" and not necessarily about settling down and buying homes. HousingWire reports, however, that despite what many believe, Gen Z and Millennials do want to become homeowners and they're excited by the prospect.

Challenges to these generations include lack of mortgage education, lack of suitable housing supply, and an unprecedented amount of debt that limits buying power and makes them fearful of taking on more. "Any long-term effects on the attitudes and intentions due to COVID-19 are still unknown, but we have yet to see indications of major changes in sentiment," says HW. If anything, the limitations imposed by the pandemic have only made them turn to the idea of buying a home more than ever before.

So what do Gen Z and Millenials want in a home? 69% say they are open to a smaller home as long as it meets their needs. With an expected 7% rise in homebuyers who are single and a 6% increase in those who are married with no children, this makes sense. However, smaller homes are in short supply compared to the larger homes that previous generations sought.

The biggest obstacle these groups face is debt due in part to the cost of higher education. HW says that according to Northwestern Mutual's 2019 Planning and Progress Study, U.S. adults aged 18+ report having an average of $29,800 in personal debt, exclusive of mortgages. This could be one of the many reasons that 55% of those surveyed believe homeownership is out of reach financially.

What these generations actually know about buying a house isn't much. "A considerable lack of education is preventing younger homebuyers from taking the next step," says HW. "For instance, 73% were unaware of affordable down payment mortgage options, as low as 3%. Fannie Mae findings also indicate a low awareness of affordable housing solutions that go beyond traditional site-built models. Only 39% of respondents were aware of manufactured homes as a more affordable option. And when shown what the newest generation of manufactured homes looks like, the number of respondents who were interested increased by 31%."

It's ultimately up to the lending and real estate communities to educate younger buyers so that can actually see a path to homeownership, HW says. Get Approved Today!

Source: HousingWire | TBWS

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