Get ready for Gen Z. People between the ages of 18 and 23 are eager to become homeowners, and many are already setting aside money for a down payment.
More than half of Gen Zers surveyed said they are saving for a home, and 59 percent say they plan to buy a home within the next five years—before they reach the age of 30—according to Bank of America’s Homebuyer Insights Report, which is based on responses from nearly 2,000 people. Further, 71 percent of respondents say they know exactly what they want in their future home.
“It’s exciting to see Gen Z wanting to own a home for reasons like building their personal wealth over time,” says Steve Boland, head of consumer lending at Bank of America. “Despite their young age, this group is pragmatic and actively planning for their future. They recognize buying a home isn’t easy and have a clear vision not only about where they plan to get help but also how they are willing to help themselves in order to make it happen.”
Gen Zers say saving for a down payment and closing costs is the top impediment to being able to buy a home, the survey shows. But they view it as less of a challenge than previous generations (66 percent versus 69 percent of millennials, 72 percent of Gen Xers, and 74 percent of baby boomers). Also, they’re optimistic: 93 percent say that any challenges are still worth overcoming in order to achieve homeownership.
They’re Willing to Make Sacrifices
Gen Zers are forgoing splurges for the sake of saving. When researchers asked what they would do with an extra $5,000, respondents to the survey said they’d rather save it for a down payment than plan for their dream wedding (80 percent versus 20 percent). They also said they’d use it to save for a down payment over a shopping spree (76 percent versus 24 percent). Also, they’d save for a down payment over taking a vacation (71 percent versus 29 percent).
They don’t expect to save for homeownership alone, however. Nearly two-thirds of prospective Gen Z home buyers say they expect to receive some financial help to buy a home, such as from their parents (21 percent), through a down payment assistance program (17 percent), or from other family members (15 percent).
But they’re also willing to make some sacrifices to boost their savings. Nearly half said they would be willing to get a second job, 34 percent said they are willing to attend a university that would leave them with less student loan debt, and 32 percent said they’d move in with parents or in-laws to save money.