Generation Z is still mostly comprised of kids, but analysts in the housing market are already expecting big things about this generation’s future appetite for real estate.
Generation Z, born in 1997 and beyond, is a cohort of about 65 million to 75 million who are expected to start buying homes on a large scale within five to 10 years. The oldest members of Gen Z are in their early 20s. Millennials are currently the largest group of homebuyers. But Gen Z is already showing some characteristics for being real estate savvy, bargain hunters, and tech lovers, likely competing for smaller and more affordable homes, real estate experts told realtor.com®.
Gen Z is also showing signs of being more risk-averse and more financially savvy than millennials and Generation X. More than a tenth of them are already saving for retirement. Also, they’re reportedly choosing less pricey colleges so they don’t face a ton of student debt.
“They grew up in the wake of the Great Recession. They saw what their parents went through and become more fiscally conservative as a result,” says Chris Porter, chief demographer at John Burns Real Estate Consulting. “They know the value of saving and not living beyond their means. It was something ingrained in them at a very young age.”
Real estate experts predict that this generation will mostly shy away from large, expensive homes and show a preference for lower-priced, smaller homes to accommodate their likely smaller families.
“They’re not going to stretch to buy a house they can’t afford, because that goes against everything they’ve done up until this point,” Jason Dorsey, president of the Center for Generational Kinetics, told realtor.com®. “They’re going to be very worried about buying a home that might go down in value.”
Growing up watching home design shows on HGTV and DIY videos on YouTube, they may be more willing to buy fixer-uppers too, Porter notes.
Technology and social media will have a big influence on this generation’s spending habits. They’ll likely turn to social media for guidance on where to live, according to a new report from Accenture, a management consulting firm.
“Our research shows that social media has a significantly greater impact on Gen Z shopper purchasing behaviors,” according to the report. “This younger generation [is] expressing a greater willingness to buy products and services via those channels.”