Gen Z homebuyers focused more on cost than location
Aspiring Gen Z homeowners would rather change ZIP codes than increase their budgets, and finding the “right” home trumps buying one quickly, a new survey finds.
Key points:
- Nearly two-thirds of Gen Zers in a NewHomeSource survey said they'd relocate to a new city or state to afford a home, while only 19% would raise their housing budget.
- Most respondents said they wouldn’t add more than $300 to their monthly housing payment, and they’d prefer to spend no more than $150 extra each month.
- Top motivations to move included lifestyle factors, a new job or being close to family. The preferred home features cited by Gen Zers were a large backyard, garage and pool.
The dream of homeownership is still alive for young Americans, but they don't want to bust their budgets to make it happen, a new survey found.
"Understanding our Next Generation of Homebuyers," published today by NewHomeSource, suggests that aspiring Gen Z buyers are willing to make sacrifices to afford a home, but spending significantly more on housing costs isn't one of them.
The survey was conducted in June and included responses from roughly 1,000 Americans across 47 states born between 2000 and 2009.
Holding firm on price
According to the survey, 63% of Gen Z respondents would relocate to a new city or state rather than stretch their housing budget, while only 19% would increase what they're willing to spend.
Unlike millennials, who would pay up to $500 more each month to secure a home, most Gen Zers capped that monthly increase at $300, and the majority said they'd prefer to spend only $150 more on housing.
"Gen Z is showing a real shift in how they think about homeownership," Ali Wolf, chief economist at NewHomeSource and Zonda, said in the report. "Rather than stretching financially to buy as soon as possible, they're setting clear financial boundaries and expanding their search — often across city or even state lines — until they find a home that fits their budget and lifestyle."
When asked what sacrifices they might make to purchase a home, respondents listed moving to a less expensive area in-state (35%), looking at different neighborhoods (33%) and relocating to a more affordable state (28%) as their top three compromises. Increasing their budget was down in sixth place.
Perhaps surprisingly, more than half of those surveyed (53%) named the suburbs — ideally those with walkable, urban-style amenities — as their preferred setting.
Motivations, standards and timing
Although financial considerations are important to this generation of buyers, affordability ranked relatively low among the reasons Gen Z gave for considering a move at all, behind lifestyle (27%), a new job (21%) and proximity to family (21%) or friends (18%).
That doesn't necessarily mean affordability isn't a key concern: In a survey conducted ahead of the last presidential election, Gen Z respondents overwhelmingly cited housing affordability as their No. 1 election issue, with 91% saying it would be a factor in how they voted that fall.
The NewHomeSource findings suggest that when it comes to an actual purchase decision, however, young buyers are addressing the affordability issue by adjusting where they buy.
Respondents appeared less willing to compromise on the home itself. While 39% of those surveyed said they planned to buy a home within the next five years, they weren't opposed to waiting if it meant finding the right fit.
"It's very important to save for the house that I want and like, not just rush to buy an affordable home," one respondent said.
The top home features desired by Gen Z buyers include a large backyard and a garage — each cited by 32% of respondents — followed by a pool (ranked as a top priority by 28% of respondents) and a large kitchen (27%).
Redefining milestones, pathways to homeownership
The findings align with some other recent data on how Gen Z is approaching (and delaying) homeownership.
A Coldwell Banker survey released last November found that 84% of Gen Zers are postponing major life decisions like marriage, kids and career changes until they can afford to buy, and 63% of Gen Z respondents said they'd consider co-buying with family or friends, far more than any other generation. About 1 in 5 are already living with parents specifically to save toward a purchase.
Meanwhile, NAR's latest generational trends report shows that while Gen Z accounts for just 4% of recent buyers, the generation is redefining the traditional milestones associated with a purchase: "The driving force is simply the desire to own a home of their own," NAR Deputy Chief Economist Jessica Lautz noted in the report.
For real estate professionals working with young buyers, the NewHomeSource data suggests that broadening the geographic conversation, rather than encouraging clients to stretch financially, may be a better way to guide this generation toward a purchase.