The oldest Gen Zs–individuals born between 1997-2012, are entering their mid-20s and are starting to flex their economic and social muscles. The youngest is 12 but growing up faster than any other generation before it.
Gen Zs are also incredibly vocal about their passions and concerns. As they emerge, they’re changing the rules of engagement. In the face of divisive politics, existential environmental threats, global pandemics, and social justice challenges, they are calling out a broken status quo, demanding an urgent reckoning, bold leadership, and a radically better future.
The Good News Is That Gen Zs are twice as likely than previous generations to have bought or want to buy a home. 87% want to buy before the age of 35.
The downside of this is that Generation Z will carry a heavy student loan debt burden. Today, newly minted college graduates have an average of $37,000 in student loan debt. But their salaries are not keeping pace with rising costs of housing.
Gen Z believes in the American Dream of homeownership. Nearly all of them, 97%, hope to own a home in the future. About 100,000 members of Gen Z have already purchased a home. Almost half of these paid less than $10,000 for a down payment. Most of these had saved for a down payment for less than five years.
Homeownership isn’t just about the American Dream for Gen Z. Having grown up watching HGTV and YouTube DIY videos, Gen Z wants to customize their space. Some research shows over 60% of Gen Z said this was a top reason for wanting to buy a home.
Gen Z is beginning to confront a daunting fact: Their dream of homeownership may be tough to turn into reality anytime soon.
First came the inventory shortages and skyrocketing prices of the pandemic-fueled years of 2020-21. Some of that housing market insanity began to die down in 2022, but then rampant inflation reared its ugly head. The average price of a home was nearly $543,000 at the close of 2022, compared to $307,400 (the equivalent of $392,847 today) in 2013, according to the U.S. Census Bureau and HUD. Financing was less expensive, too: The interest rate on a 30-year fixed-rate mortgage back then averaged 3.98 percent, compared to the current 6.6 percent.
Small wonder that buying a home can feel downright impossible for a lot of Gen Z members.
However, when Gen Z members are ready to buy, they are highly likely to put their tech-savvy skills to use. Sixty-seven percent of Gen Z homebuyers would consider using an app or an online service to make their purchase.
This generation will begin pushing for more affordable home types that possibly haven’t even been thought yet. Look for smaller homes with multi-functional rooms, environmentally friendly and sustainable and using more digital devices built into their homes.
If they can’t find what they need under the present system of bloated regulations, building codes and other things that restrict them from owning a home, look for them to begin advocating for change.
The Baby Boomers and Gen Xers that are currently running state and Federal housing agencies, building homes and housing units in multi-family buildings will soon see Gen Zs and very soon Gen Alphas putting pressure on them to change.
Offsite factories can expect both of these newest generations to want what they want…now! They were raised by the Internet and YouTube. They communicate by text and social media. They’re changing everything from the restaurants where they eat to the clothes they buy.
If the offsite industry thinks things are tough today, you haven’t seen anything yet. These young people are driven, they don’t respect conformity and they will are beginning to have the fastest growth in buying power our country has ever seen.
Our industry needs to listen to them now and begin changing the way we think of housing. Some offsite factories are already gearing up to meet their needs because their owners are closer to their age than the present age of our industry leaders.
It’s time to start making Gen Zs happy before they decide they won’t buy what we’re selling.
Gary Fleisher, the Modcoach