The hottest new trend among Generation Z isn’t quiet quitting or Tomato Girl Summer. It’s a lot more trad: buying a home. As this generation—the oldest among them turning 26 this year—matures to an age where home ownership becomes a common consideration, the question of whether it is a financial possibility is the primary concern. (A starter home, in this economy?!)
Many fear the US is still marching towards a recession. Student loan forgiveness was struck down by the Supreme Court in July; Gen Zers, unfortunately, bear the brunt of that ruling by shouldering substantial debt that they must repay to creditors. Despite signs of cooling inflation, interest rates may increase, again. The housing market is reportedly weak, with rent in youth-magnet coastal hubs like San Francisco and New York City reaching an all-time high. Most shocking? 84% of Gen Z want a housing crash to happen to afford a home, per a report by Consumer Affairs.
i can’t wait to graduate and then be in debt for the rest of my life and never be able to afford a home 😎😎😎😎😎😎😎😎😎😎😎😎😎😎😎— mia :| (@miafrann) July 18, 2023
In spite of this fatalistic sentiment, the consensus of available data points to members of Gen Z purchasing homes at a faster rate than their Millennial and Gen X counterparts. According to one study by Redfin, nearly one-third of Gen Zers owned their home in 2022 at the age of 25. This is due to many factors, the most apparent among them being that Gen Z was able to take advantage of pandemic-driven mortgage rates, high inventory and the advent of remote work, which created a previously unheard of flexibility to work from anywhere. Home buying in places like Virginia Beach and Salt Lake City outpaced more traditionally popular urban zones, like Los Angeles or New York.
In contrast, Millennials continue to be drawn to tech hubs like Seattle and San Francisco, where job opportunities in the technology industry are abundant (or so the myth perpetuates). And surprisingly, even more than Millennials, Gen Zers are seeking in-person work opportunities. These adherents toward more socially accepted benchmarks of success have led many Gen Zers to prioritize financial stability and homeownership as key life goals. Popular career choices for Gen Z remain similar to generations prior: businessperson, doctor and engineer. While it’s still a goal for Millennials, entering the workforce post-2008 financial crash coupled with the average home price (and the salary it would take to buy it) has forced many onto the hamster wheel of renting.
HOW DOES THE GEN Z HOUSING MARKET LOOK?
ARE GEN ZERS OR MILLENIALS BUYING MORE HOMES?
Shifts in The Housing Market and The Beginning of Airbnb’s Decline
Although housing inventory is hovering at record lows, especially in metro areas, that is predicted to change. The age of owning a secondary rental property for purposes of renting it out on Airbnb—a trend encapsulated by the “rise of the young landlord”—is reportedly coming to an end. Revenues at Airbnb are falling, with Reventure Consulting CEO Nick Gerli predicting that there will soon be a “wave of forced selling from Airbnb owners later this year in the areas hit hardest by the revenue collapse.” (Airbnb denies this claim. And while the overall trend is bona fide, the data Gerli used to present his argument was slightly exaggerated.)
Along with home ownership, the rise of digital nomadism—working remotely while traveling with nowhere specific as a home base—as a trend raises an interesting question: does owning a home really matter? The number of digital nomads in the US surged almost 50% to 11 million in 2020, and then increased again to 15.5 million in 2021. With the ability to work remotely and the allure of “bleisure” travel, some individuals, including Gen Zers, may prioritize experiences and flexibility over the conventional notion of home ownership. This trend challenges traditional perceptions and highlights the evolving priorities of younger generations.
Overall, the landscape of home ownership and the attitudes of Gen Zers are multifaceted. While many Gen Z individuals are actively pursuing home ownership, there are also considerations such as financial uncertainty, career aspirations, and the rise of digital nomadism that influence their decisions and priorities. Those aspirations also shift when taking into consideration one’s marital status and gender. A Generational Trends survey revealed that the highest percentage of home buyers among Gen Z were single females at 31%. Married couples came in at 30%; single males at 25%.
I’ve noticed that being able to work remotely has made me much more productive and has increased my quality of life. I don’t want to have to be tied down to one location, especially when I have a job that is inherently compatible with being remote.- Juriel, Designer
HOW DOES RENTING COMPARE WITH HOME OWNERSHIP?
DOES GEN Z STILL ABIDE BY THE PHRASE "NEW YORK OR NOWHERE?"
The Cost of New York City
The idea that New York City is still the biggest draw for young people, which was true at least as recently as 2015, has become a bit less defined. Those who are seeking a career in a creative field still favor New York over other major US cities, though post-Covid migration patterns are seeing Gen Zers head to less traditional cities to establish themselves.
For the majority, however, it’s still the Big Apple: 41% agreed that New York is the place to be young and creative, whereas 36% felt that it wasn’t. A large concern raised in responses is the cost of living and the privilege of being able to live in New York as a young person. While young creatives may aspire to live in a creative center like New York, they recognize how expensive it can be and the struggle of having to hustle in a city with such a high cost of living.
Is it still New York or nowhere? “DUH! New York never goes out of style, and neither do good bagels or pizza,” said Jenna Resnikoff, a Senior Account Executive at Day One. “I grew up on Long Island so I think the general ‘New York’ vibe will always feel like home to me.”
“Honestly, I don’t think it makes sense to buy property in New York, at least to live in in the near future,” Juriel Furukawa, a Gen Z Designer at Day One, told me. “It would be impossible to get anything nice enough to live in. I do think it could have great potential for renting but I don’t think I want to deal with NY real estate. Sounds like a crazy mess.”
In our digitally connected world, Gen Z is able to pursue their passions from anywhere, leveraging social media. The belief that New York City is the ultimate destination for creativity and success is being challenged by many. They recognize that creativity and achievement can be nurtured wherever they’re located. Los Angeles was often mentioned as one of the alternative cities that rivals New York, particularly in the music and film industries, serving as a thriving hub for creative expression.
Though all of the data is heartening, the reality for most of Gen Z is that they are nowhere near owning a home or see little hope that home ownership is in their future. In fact, 40% say they are living paycheck to paycheck and fear they won’t even reach the level of success of their parents. It’s easy to dismiss younger generations as focusing on the wrong pathways to success, but Gen Z is clearly doing something right in shaping their future.