Gen Z's Guide to Buying a Home
If you’re a member of a younger generation, like Gen Z, you might be wondering if buying a home is ever going to be possible for you. With inflation, rising home prices, and mortgage rates seemingly stacked against you, it's a common concern.
While this housing market is indeed challenging for first-time homebuyers, it is still achievable, especially with the help of professionals.
Here are some helpful tips you may get from a pro.
1. Explore Your Options for a Down Payment
If saving for a down payment is your biggest obstacle, you may have more options than you think. There are over 2,000 down payment assistance programs designed to make homeownership more achievable. Additionally, many Gen Z homebuyers receive financial help from loved ones. According to LendingTree, 49% of Gen Z homebuyers used money from family or friends for their down payment.
It's also important to know that you typically won’t need to put down 20% unless specified by your loan type or lender. Working with a trusted mortgage professional can help you explore your options, understand how much you'll really need, and learn about any guidelines on receiving financial gifts.
2. Live with Loved Ones To Boost Your Savings
Many Gen Z buyers are cutting their rental costs by moving back in with friends or family to save money faster. Bankrate notes that 30% of Gen Z homebuyers move directly from their family member’s home to a home of their own. This strategy can significantly accelerate your savings.
3. Cast a Broad Net for Your Search
When you’ve saved enough, a professional can help you broaden your search. Since the supply of homes for sale is still low and affordability is tight, they can suggest strategies and avenues you may not have considered.
For instance, rural or suburban areas tend to be more affordable than urban ones. Although the city may be more vibrant, the cost of living might make it worthwhile to look further out. Additionally, considering smaller homes, condos, or townhouses can increase your chances of finding a more affordable option. Colby Stout, Research Analyst at Bright MLS, advises:
“Being flexible on the types of home (e.g., a condo or townhome versus a single-family home) and exploring more affordable neighborhoods is important for first-time buyers.”
4. Take a Close Look at Your Wants and Needs
An agent can help you differentiate between your must-haves and nice-to-haves. Your first home doesn’t have to be your forever home; the goal is to get your foot in the door and start building equity. If you want to buy, you may find that making some compromises is worth it. Chase offers this advice:
“An open-minded approach to house-hunting may be one way for Gen Z homebuyers to maintain some edge. This could mean buying in areas that are less expensive. Differentiating needs vs. wants may help in this area as well.”
An agent will help you prioritize your list of home features and find houses that meet your most important criteria. They can also explain how building equity can benefit you in the long run, potentially making it easier to move into your dream home later.
Real estate professionals have valuable expertise on what’s working for other buyers like you. Lean on them for tips and advice throughout the process. As Directors Mortgage says, with that support, you can make it happen:
“The path to homeownership may not be a straightforward one for Gen Z, but it’s undoubtedly within reach. By adopting the right strategies, like exploring down payment assistance programs and sharing living costs with relatives, you can bring your dream of owning a home closer to reality.”
Let’s connect to get you set up for long-term success.
