Caleb Hallis running out of time. The 25-year-old mechanical engineer and his 23-year-old wife, a nurse, have been looking for a home of their own for the past six months in the Huntsville, AL, area. Their only must-haves are the home must be relatively move-in ready, be in a safe community, and have a garage where Hall can repair the couple’s vehicles.
But they have yet to have an offer accepted—and their first child is due in June.
“It’s pretty difficult and discouraging,” says Hall. “We’re stuck in this limbo. I have a great job, and we have a decent amount of money saved up in the bank, and we just can’t find a house to buy.”
About two-thirds of Generation Z, born between 1997 and 2012, believe it’s still possible to become homeowners, according to a recent Realtor.com® survey. But for these budget- and convenience-minded buyers, the oldest of whom are turning 27 this year, breaking into the market when home prices and mortgage rates are so high is a challenge. So they’re willing to make trade-offs in the size, location, and amenities of the home—except when it comes to laundry.
While roughly 18% of this generation are already homeowners, according to John Burns Research & Consulting, the vast majority are not and nearly half live with family.
“At their core, Gen Z still aspires to homeownership,” says Chris Porter, chief demographer at John Burns. “That will happen later for them because housing affordability is a big challenge.”
Last month, Hall saw one move-in ready, three-bedroom, two-bathroom home in a “decent area” listed at $285,000, the top of the couple’s budget. However, the 1,300-square-foot abode received six offers in two days. It went to an all-cash buyer who waived the appraisal contingency.
“The houses that are listed at a decent price just get swept up really quickly, and swept up by people who are coming in with a lot of equity,” says Hall. He and his wife expect to stay in their rental for the time being.
“We’re hoping that things will get better, but it’s really out of our control,” he adds.
What Gen Z homebuyers are willing to give up
Gen Z has developed a reputation for being more frugal than prior generations (such as the millennials with their avocado toast.) The oldest came of age during the Great Recession in the late 2000s, and many saw their families struggle. And as these younger folks are just getting started professionally, they typically earn less than their millennial and Gen X peers.
So it’s not surprising that with the cost to purchase a home so high, Gen Z is looking to save wherever they can. That might help to explain why owning a large home isn’t as important to this generation, say real estate and generational experts.
Recent college graduateRiley McConnell, 22,hopes to eventually move into an apartment with her partner somewhere affordable where she can launch her career. For now, the marketing and communications coordinator is currently working with her grandfather, a demographer, and living with her parents in Connecticut.
She and other members of her generation are open to choosing apartments, condos, or townhouses over single-family homes, she says. The smaller units are cheaper and easier to maintain.
“Having a house is a lot of work,” she says.
Many are willing to give up garages and large kitchens to get into a home of their own, says demographer Porter. But they want to ensure that every square foot counts with rooms in their homes being functional and multipurpose.
For members of Gen Z, their homes might also be their place of work, at least for a portion of their week. So they’re looking for properties with home offices or quiet areas where they can log in for the day.
“Home technology and access to [high-speed] internet is really, really important, too,” says Mark Beal. He is a public relations professor at Rutgers University who wrote four books on Gen Z. “They’re doing all their Zoom calls and meetings from home.”
They also expect their home to be wired with the kind of smart technology that will make their lives easier—instead of just looking cool.
“Tech is great, but it has to be sophisticated,” says Jonah Stillman, co-founder of GenGuru, a consulting firm. He also co-wrote “Gen Z @ Work: How the Next Generation Is Transforming the Workplace” with his father. “When you’ve never known a world without technology, you just expect it to be there.”
The one thing Gen Z homebuyers are not willing to compromise on
There is, however, one thing Gen Z homebuyers are not willing to do without.
About four-fifths of Gen Zers wouldn’t live in a home without a washer and dryer or central air conditioning, according to the John Burns survey. Also, 61% wouldn’t move into a place without a dishwasher. Half require a private outdoor space.
“The closer the laundry is is honestly what a lot of us look at, those little luxuries,” recent college grad McConnell says.
Work-life balance is important to her generation, she adds. “You go to work, and you don’t want to go out [again] to do something as simple as laundry.”
These younger folks are also mindful of future costs.
Hall, who is still looking for his first home with his wife, wants to avoid having to sink a lot of additional money into whatever property they eventually buy. He is trying to ensure the homes they bid on don’t have older roofs or heating and cooling systems that might give out soon.
“It would be tough to recuperate the costs if one of those has to be replaced,” he says.
It’s not all location, location, location with Gen Z
Generation Z might not be as interested in living in expensive urban downtowns as prior generations were due to this shift toward remote and hybrid work. This has enabled many to achieve homeownership by moving to more affordable, smaller cities and different parts of the country.
“Remote work certainly opens up more parts of the country to Gen Z,” says Porter.“They’re looking for attainability and affordability. They’re seeking out those geographic areas where that’s achievable for them.”
They do, however, want to live near gathering places where they can be with other people. They’re likely to be looking for areas where they can go out over the weekend to a brewery or high-end bowling alley, or enjoy some other experience they can’t do online.
“We know that Gen Zers are looking for big-city life, but they’re not looking for those big costs that come with it,” says Stillman.
However, this doesn’t mean that Gen Z won’t eventually gravitate toward big cities when their careers take off. Many might even wind up buying those big homes in the suburbs as their salaries rise, housing costs come down, and they start having families—just like the millennials and prior generations.
“Each of our generations tends to go through the same stages, but they reinvent them,” says Stillman. “Gen Z will hit many of the same stages, like a family and buying a home. But it’s undeniable that Gen Z will likely reinvent how we do those things.”
