Blog posted On October 23, 2018
With so much focus on Millennial home buyers, the next incoming generation of buyers has been slightly overlooked. According to Zillow, 3% of last year’s home buyers were born after 1995, meaning over 100,000 homeowners across the country are 23 and younger. “I’m a little surprised to see the numbers as large as they are,” commented Rob Dietz, chief economist and senior vice president for economics and housing policy for the National Association of Home Builders (NAHB).
They have some help.
According to a Zillow report, 67% of Gen Z home buyers bought a home with a gift or loan from a family member or friend as part of the down payment. In the past, down payment gifts have been restricted to close family, employers, or church organizations. As saving for a down payment becomes harder and harder to achieve, real estate professionals are getting creative with new options. With HomeFundItTM by CMG Financial, almost anyone can give almost any amount. All gifts are documented within the platform, are compliant with Fannie Mae and Freddie Mac, and are ready to be used at the time of home purchase.
They’re skipping renting.
“The traditional life cycle is to rent, especially for younger consumers who might have student loans,” said Dietz. However, many Gen Z home buyers are moving right from their family households into homes of their own. Families who contribute toward the home purchase, see the home as an investment. Gen Z home buyers are also entering a more stable housing market, compared to the early post-Recession market some Millennials and Gen Xers faced. 62% of Gen Z members surveyed say homeownership is the cornerstone of the American Dream.
They’re moving quickly.
Over two-thirds of Gen Z buyers purchased their home within three months of starting their home search. Comparatively, about half of Millennials bought a home within three months and less than half of Gen Xers and Baby Boomers bought within this time frame. Gen Z home buyers also tend to stay close to home. They are more likely than older generations to stay close to family, sometimes even in the same neighborhood.
If you’re interested in buying your first home and want to see how much you’ll need for a down payment, or if you qualify for assistance, get preapproved for mortgage financing first. Mortgage preapproval is not a commitment to doing business, it’s just a way to evaluate how much home you can afford, what loan programs you should explore, and how much you will need to put down. Mortgage preapproval can also help your loan officer determine if you qualify for down payment assistance. The biggest obstacle first-time home buyers of all generations face is saving for a down payment. With over 2,500 down payment assistance programs available, this obstacle is easy to overcome.