More Than Half of Gen Z Already Saving for a Home, Motivated by Current Homeowners of All Ages Who Say the Satisfaction of Owning Outweighs the Challenges
The youngest generation of homebuyers is not dragging their feet. According to Bank of America’s Homebuyer Insights Report, 59 percent of prospective homebuyers between the ages of 18 and 23 want to buy within the next five years, meaning they would own a home before the age of 30. While certainly aspirational, this isn’t just a pipe dream for Gen Z; more than half have already started saving, showing their commitment to this goal, and 71 percent say they know what they want in a home.
“It’s exciting to see Gen Z wanting to own a home for reasons like building their personal wealth over time,” said D. 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.”
While young prospective buyers identify saving for a down payment and closing costs (66 percent) as the top barrier to buying, they see it as less of a challenge than other generations do (vs. 69 percent of millennials, 72 percent of Gen Xers, and 74 percent of baby boomers). Covering the monthly costs of owning (58 percent) and – more so than any other generation – lacking knowledge about where to start (52 percent) are also considered barriers to homeownership by Gen Z.
Gen Z chasing the dream and willing to sacrifice
Knowing that there are barriers isn’t deterring Gen Z, though. Prospective Gen Z homebuyers are prioritizing saving over frivolous spending. When asked what they’d do with $5,000, they said they would rather:
Save it for a down payment than plan their dream wedding (80 percent vs. 20 percent).
Save it for a down payment than go on a shopping spree (76 percent vs. 24 percent).
Save it for a down payment than take a vacation (71 percent vs. 29 percent).
Nearly two-thirds of prospective Gen Z homebuyers think they will receive some financial help to buy, most likely from parents (21 percent vs. 14 percent of millennials), down payment assistance programs (17 percent vs. 19 percent of millennials) or other family members (15 percent vs. 11 percent of millennials). However, this help is not necessarily a gift as more than half of Gen Zers think they will need to pay their parents back, compared to 40 percent of millennials.
Gen Z aren’t just planning to ask for help; they are also taking action to achieve their goal. Nearly all (94 percent) are willing to make intentional sacrifices to buy:
Nearly half are willing to get a second job (vs. 38 percent of millennials).
Thirty-four percent are willing to attend a university that will leave them with less student loan debt (vs. 15 percent of millennials).
Thirty-two percent are willing to move in with parents or in-laws (vs. 23 percent of millennials).
A word from the wise: there’s light at the end of the tunnel
Gen Z’s dreams of homeownership make sense given that most current homeowners (93 percent) agree that owning a home is worth the challenges.
Further proving that homeownership belongs on Gen Z’s radar is current homeowners’ contentment with many aspects of their lives:
Eighty-four percent are satisfied with life overall, compared to 70 percent of prospective buyers.
Eighty-three percent are satisfied with where they currently live, compared to 65 percent of prospective buyers.
Seventy percent are satisfied with their financial well-being, compared to less than half of prospective buyers.
“Our goal is to help our clients reach their financial goals, and building their personal wealth over the long term through responsible, comfortably affordable homeownership is one of the biggest financial goals they have,” added Boland.
To learn more about the Bank of America Homebuyer Insights Report, click here.
Bank of America Consumer Lending Bank of America’s Consumer Lending unit includes First Mortgage, Home Equity, Consumer Vehicle Lending and residential real estate lending for our Global Wealth and Investment Management business units. Each business is focused on delivering a distinctive and consistent client experience through competitive product offerings, quality loan production, choice of multiple connection and delivery methods, and operational excellence based on a client’s unique attributes and relationship with us.
About the Bank of America Homebuyer Insights Report Concentrix Analytics conducted an online survey on behalf of Bank of America between January 30 and February 21, 2019. Concentrix surveyed a national sample of 1,919 adults ages 18+ who currently own a home or plan to in the future. In addition, the national sample was supplemented by another 782 respondents to reach the following groups: Generation Z, single females, single males, renters and homeowners that have paid off their mortgage. The margin of error for the national quota is +/- 2.2 percent, and the margin of error for the oversampled markets is approximately +/- 3.5 percent, with each reported at a 95 percent confidence level.
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