New Zillow survey finds younger generations still believe owning a home is part of the American dream, but they don’t know how they’ll achieve it
, /PRNewswire/ — The American dream of homeownership is not dead, even for Gen Zers and millennials1, but they believe their path to get there will be challenging and may even require some luck given the affordability challenges facing many buyers today. New research from Zillow® finds that 52% of Gen Zers and 57% of millennials who don’t currently own a home believe they’d need to win the lottery to afford one.
Outside of winning the lottery, large shares of both generations (95% of Gen Zers and 94% of millennials) say they would have to make some life changes in order to make their dream of homeownership a reality. About 40% of millennials say they would need to get a second or third job, and 28% of Gen Zers say they’d have to make a career change in order to afford a home right now.
The housing affordability crisis is the worst it’s been in at least 15 years. Home values are up 3% over the past year, but during the peak of the pandemic, home values were rising in the double-digits. Record-fast home value growth has already been squeezing budgets, and now rising mortgage rates are compounding the affordability challenges many buyers are facing.
“These findings highlight the gap between Gen Z and millennials’ dream of owning a home and their ability to actually make it happen,” said Zillow’s home trends expert Amanda Pendleton. “Mortgage rates have been on the rise since last year, sending monthly housing costs through the roof — the typical monthly mortgage payment is now $431 higher than a year ago. Combine rising rates with record-breaking home value appreciation and it’s easy to understand why younger generations are wondering how they’ll ever be able to afford a home.”
When it comes to a down payment — a major barrier to homeownership — 36% of Gen Zers say they’d give up their beloved social media if it meant magically having enough cash to put down on a starter home.
To put the down payment challenge in perspective, 20% down on the typical U.S. home ($334,944) means coming up with nearly $67,000. In pricier markets, a down payment can easily exceed six figures.
Many buyers don’t realize a 20% down payment isn’t usually required. Shoppers can use Zillow’s down payment assistance tool to see what local resources may be available to them to help make homeownership a reality.
Still, these two generations are optimistic about the future. About two-thirds of the Gen Zers and millennials surveyed say it’s realistic to think they can buy a home within the next five years.
For first-time buyers looking to get in the game this spring, here are a few tips that could help make the dream of homeownership a reality:
Understand what you can afford. Buyers should start with a mortgage calculator and affordability tools to understand what goes into a mortgage payment and what they can realistically afford on a monthly basis. Then they can use Zillow’s new app filter to shop for homes they are confident are within their range of all-in monthly costs instead of looking at list prices, clarifying a key source of confusion for buyers.
Find an agent you trust. Zillow’s agent finder tool helps buyers find the best agent to fit their specific needs. Buyers can read reviews of top-rated real estate agents in their area and reach out to them directly.
Get pre-approved for a mortgage — not just prequalified. Though it’s a more extensive financial check, pre-approval will give the buyer — and the seller — more confidence in the buyer’s ability to finance the home. A Zillow survey2 finds 86% of sellers prefer a buyer who has been pre-approved, as opposed to pre-qualified, for a mortgage. Buyers can start the pre-approval process online with Zillow Home Loans.
|
In order to buy a home right |
Gen Zers (non- |
Millennials (non-homeowners 27– |
|
Win the lottery |
52 % |
57 % |
|
Give up all spending on clothing, |
26 % |
27 % |
|
Get a second or third job |
27 % |
39 % |
|
Move to a different city |
20 % |
25 % |
|
Marry someone with savings |
26 % |
16 % |
|
Change careers |
28 % |
22 % |
Survey Methodology
This survey was conducted online within the United States by The Harris Poll on behalf of Zillow March 16–20, 2023. Among the 2,066 U.S. adults ages 18 and older surveyed, 306 were Gen Z adults ages 18–26 and 585 were millennials ages 27–42. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.8 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact press@zillow.com.
About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life’s next chapter. As the most visited real estate website in the United States, Zillow and its affiliates offer customers an on-demand experience for selling, buying, renting, or financing with transparency and ease.
Zillow Group’s affiliates, brands and subsidiaries include Zillow®; Zillow Premier Agent®; Zillow Home Loans™; Zillow Closing Services™; Trulia®; Out East®; StreetEasy®; HotPads®; and ShowingTime+ ℠, which houses ShowingTime®, Bridge Interactive®, dotloop®, and interactive floor plans. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).
1 71% of Gen Zers and 86% of millennials surveyed believe owning a home is part of the American dream.
2 Zillow Group Population Science conducted a series of nationally representative surveys, each sampling between 1,000 and 2,100 household decision-makers who bought in the past two years, sold in the past year or intend to buy a home in the next 12 months. The study was fielded from March through April 2022. To learn more about survey methodology, contact press@zillow.com.
SOURCE Zillow
Read More
In today’s society, home ownership is becoming increasingly out of reach. According to a survey conducted by real estate portal Zillow, more than half of adults aged between 18 and 34 believe it would take a lottery win for them to be able to move into a home of their own.
The latest figures paint a stark picture of a generation struggling against the ever-climbing cost of homes, with nearly two-thirds of those surveyed saying they would resort to winning the lottery to buy a home rather than attempting to save up the large sums required.
This worrying statistic not only serves as a reminder of the pressures faced by those attempting to get onto the property ladder, but also of the need for more affordable housing across the board.
The survey also showed that 20 percent of adults aged 35 to 44 believe the same, rising to 27 percent among those aged 45 to 54. While older adults are potentially able to draw on life earnings to purchase a home, 44 percent still said that, due to the expense of homes, a lottery victory was their best option.
With the cost of buying property only set to climb as the years go on, action must be taken to decrease lessening the financial strain for both young and old alike. Increasing the availability of affordable housing and improving the options for low-cost finance would go a long way in making home ownership a reality for those feeling priced out.
While the recent survey serves as a harsh reminder of the plight of those attempting to buy their own home, the situation is not without hope – with governments and lenders scrambling to increase the options available in the marketplace, there is an opportunity to make home ownership an achievable goal once more.
