The American Dream. Many are familiar with the idea that owning your own home, starting a family, and having a stable job is the prospect of success. Even as times change, this idea of success has been passed from generation to generation as an aspirational goal to achieve. Baby Boomers and Gen Xers have been the target demographic for the real estate market for decades, but now a new generation is entering the real estate market. With many younger Millennials and older Gen Zers approaching the home buying stage of life, it’s time to examine what Gen Z homeownership looks like.
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Why is Gen Z Not Buying?
The simple answer is money. In the 1960s, the average home cost approximately $11,900. With an adjusted inflation rate to today, that would be $104,166. Over time, home prices adjusted with the economy and gradually got more expensive. Today, the average American home costs a whopping $336,900.
With many younger Millennials and Gen Zers entering the workforce with the burden of sizable college debt, it is nearly impossible to afford a home. During the COVID Pandemic, home prices dropped to a somewhat manageable rate for prospective homebuyers. However, this trend was short-lived and home prices are on the rise once again.
Gen Z Home Ownership Solutions
Here are a few ways to make home-buying more achievable:
Research First-time Homebuyer Mortgage Options
There are first-time homebuyer’s mortgages available that don’t require a 10 to 20 percent down payment. You might be eligible for a Federal Housing Administration (FHA) mortgage, US Department of Veterans Affairs (VA) loan, or a US Department of Agriculture (USDA) loan. Make sure you thoroughly research your options before choosing a loan.
Lower Your Debt
If you accumulated a large amount of debt from student loans or other miscellaneous costs, it is best to get that debt to a manageable level before acquiring another pricey payment.
Stick to Your Price Range
Your dream house may not be in your price range, but that doesn’t mean you should abandon your budget. It is important to remember your budget so you can live within your means. Buy what you can afford to avoid unnecessary financial stress!
Consider a Fixer-Upper
If you’re handy and want to personalize every detail of your new home, consider purchasing a fixer-upper. Fixer-uppers are generally cheaper than ready-to-move-in homes, and you may even qualify for FHA 203(k) loan.
Explore Partial Ownership
There are investors who don’t want to live in your house but will pay part of the purchase price for a percentage of ownership. This is a financially complex transaction, be sure to contact an attorney and work out a contract/plan before moving forward.
Revise Monthly Budget
Analyze your monthly spending and see what can stay and go. Cutting unnecessary spending will benefit you in the long run.
Renting or Buying?
With the right changes, younger Millennials and Gen Zers can achieve their American dream of home ownership. Explore your many options, so you can turn your dream into a reality. Purchasing a home today can be extremely difficult, but it is achievable. We hope that this blog was informative and helped you with your home buying process. For more information regarding property ownership in real estate, contact Metropolitan Title. Our team is here to help you.