Despite current housing conditions, 72% of Gen Zers are determined to become to homeowners in less than six years. According to a new study by Rocket Mortgage, 37% of these Gen Zers, with an average participant age of 22, want to buy in the next one to three years.
The largest setback to homeownership for respondents is income at 23.3%, followed by home prices at 14.6%, and lack of savings at 11.9%. Only 1.9% of Gen Zers reported current interest rates as a barrier to purchasing their first home.
As 56.2% responded that they are saving for their first home, the majority (79.8%) believe they can only afford a home that is $200,000 or less, and only 6.9% say they can afford a home over $500,000 in the desired time frame. The discrepancies in home prices and salaries range drastically from state to state, Rocket Mortgage noted.
Of those who plan to buy soon, 21.9% plan to put down 8% to 11% of the purchase price. Others plan to put down 4% to 7% or 12% to 15%, with only 10.1% planning for a 20% down payment. The study found that many of the respondents who plan to put down 20% think that is the required amount to qualify for a mortgage.
While most respondents correctly listed income, down payment, credit score, employment, closing costs, debt-to-income ratio, length of employment, and student loans as mortgage qualifications, 40.2% incorrectly believe that education levels impact mortgage qualification. Other misconceptions involved factors like gender and marital status, which are protected in the Fair Housing Act.
Gen Z’s primary motivation for buying a home, at 34%, is to start a family. Unlike millennials who are waiting longer to have a family if one at all, 63.3% of Gen Z respondents plan to start one. Other driving factors behind buying are residential stability at 20.8% and not wanting to rent any longer at 18.2%.
The study surveyed 2,000 adults born between 1997 and 2003. Those with mortgage industry experience or who have previously purchased a home were restricted from participating.
