Gen Z is quickly becoming the largest consumer market in America.
This group accounts for just over 20% of the U.S. population with unique spending habits that have a number of industries focusing their marketing efforts to entice this audience to buy. When it comes to housing, Gen Z’s dream of homeownership is nearly universal, with 87% saying they want to own a home in the future. As a real estate professional, you'll recognize the roadblocks this group faces in bringing this dream to fruition.
From financial hurdles to grasping the expectations of the housing market, Gen Z is striving to find a reliable avenue to become homeowners. At Ownify, we reimagined the path to homeownership for the next generation of first-time homebuyers. We understand the challenges this group faces and the dire need to break through these barriers so they can achieve their American Dream of homeownership. So, if you’re wondering why Gen Z isn’t buying homes and how you as a real estate professional can help, we have the answers.
Mortgages are Unaffordable
The Gen Z population is the largest group graduating from college, with an average of over $18,000 in student loan debt. This greatly impacts their ability to move from renters to buyers, as research shows that 70% of Gen Z and millennials delay making important financial decisions due to this debt, and they are even the most likely to view their higher education financial decisions with regret. In general, The National Association of Realtors found that 51% of those with student loans have put off buying a home.
With the burden of student loans already on their backs, the skyrocketing rent rates add another layer to the financial barrier that stands between Gen Z and homeownership. The year-over-year rent increase in North Carolina was up 12% from December 2021 to December 2022, ranking it as one of the top 10 largest annual rent increases in the country. Within that same time period, median rent increased 24% in the Raleigh-Cary metropolitan area.
With student debt and climbing rent costs, the traditional 5-10% down payment required for a mortgage takes years of savings. At Ownify, we want to help this next generation transition from college to career and stop throwing their money away on rent. With our fractional ownership program, first-time homebuyers can buy without a mortgage and only a 2% down payment. But as you know, the down payment is only part of the cost required to buy a home. Here’s the good news: Ownify takes care of the other upfront costs.
Need Cash to Compete in a Fast-Moving Market
According to a recent Redfin report, Gen Z renters taking on a new lease are experiencing a personal inflation rate of over 11%. With more than one quarter of this group’s income going to rental housing, building up cash for a downpayment on a traditional home mortgage becomes further out of reach, and the American Dream is slowly slipping away. In fact, Gen Zers have a mere 2% of disposable income after paying for housing and other necessities. Additionally, the Triangle housing market is booming, with an influx of 5,000 new residents moving to the area each month and homes staying on the market for an average of 33 days as of December 2022. Homebuyers need to be ready to act quickly, while making their offer as enticing as possible to sellers.
That means cash is required. In fact, the number of all-cash repeat buyers increased from 17% to 27% between the summer of 2021 and 2022, while first-time homebuyers who paid all cash did not budge at 3%. It’s time to support first-time homebuyers who continue to feel like they’re hitting a brick wall without cash to compete. With Ownify, you can help first-time homebuyers compete in the market with an enticing cash offer and ability to close in less than two weeks, on average. That’s right, Ownify makes a full cash offer and helps you close quickly.
Understanding Expectations
As the saying goes, “you don’t know what you don’t know,” and many Gen Z adults are new to the homebuying process and unsure of what it takes to unlock the dream of homeownership. According to Rocket Home’s data, Gen Z underestimates the cost of buying a home, thinking that a home will cost approximately 38% less than the actual U.S. median home value. Unrealistic expectations can hinder the process and, while many are familiar with a down payment, you are well-versed in the number of other hidden fees associated with buying a home. From due diligence fees and closing costs to maintenance and repairs, many first-time homebuyers don’t have a clear understanding of the cash needed upfront.
With Ownify, you can help your first-time homebuyers with a simpler path to homeownership. Unlock the market for more Triangle residents with a low down payment requirement. Remove hidden fees that confuse the process and require more cash. Close more deals with an enticing cash offer and ability to close quickly - within 12 days on average.
As Gen Z strives toward homeownership, facing the uphill climb of unaffordable mortgages, cash competition in a fast-moving market and understanding expectations, there is a way real estate professionals in the Triangle area of North Carolina can assist. There is a path for the next generation to build wealth and reach the American Dream, and you can play an integral part in that. Connect with our team at Ownify, and sign up to attend our next webinar to learn how you can help more first-time homebuyers achieve the American Dream in the Triangle.
©2023 Ownify, Inc. All rights reserved. Chris Smith is CPO and Founder of Ownify, Inc.