As the first wave of Generation Z comes of age and enters adulthood, the real estate industry is taking a closer look at this unique group because Gen Z, quite simply, has the potential to turn the housing market on its head.
With birth years ranging from the mid-1990s to early 2000s and right behind Millennials, Gen Z is like no other generation. Intelligent and entrepreneurial, they have had technology at their fingertips from Day 1.
Further, with events like the Great Recession and 9/11, and social phenomena like the first African American president and same-sex marriage, Gen Z has developed a pragmatic perspective about society that is likely to translate into how they approach their future housing needs.
One of the most important characteristic of this demographic is its symbiotic relationship with the digital world. In fact, the rise of Gen Z should sound the alarm for all that a targeted Internet strategy is vital for reaching this cohort and the generations that follow. And targeted means quick and to the point. Gen Z’s attention span comes in at about eight seconds, four seconds less than Millennials, as social media and other web-based activities make it difficult for them to focus on anything for long. Gen Z is also comfortable doing most anything online, and it is should come as no surprise that they will expect to do the same with home purchases. Builders, home sellers, realtors and all others competing for Gen Z’s business should be prepared to market their products and services across multiple channels that align with the group’s harmonious relationship with all things digital.
And while Gen Z is at the seminal moment of exploring housing options outside of mom and dad’s basement – which Millennials can attest is often the only choice – they appear to be drawn more toward home ownership than their predecessors.
According to Better Homes and Gardens Real Estate, 97 percent of Generation Z believe that they will own a home in the future, and 82 percent indicate that homeownership is the most important factor in achieving the American Dream.
The Great Recession and 9/11 had a profound impact on this generation, with many growing up in households rattled by their devastation. This, in turn, has led some experts to suggest these events have contributed to making Gen Z driven to succeed and crave stability – a combination likely to spur interest in home buying as its size and purchasing power increase over time. In fact, Generation Z is expected to reach 84.7 million in the U.S. by 2020, close to a quarter of the population.
Another factor likely to drive Gen Z toward real estate is its multiculturalism. Having grown up under an African American president and changing perspectives about societal norms, the most culturally diverse generation in U.S. history has decidedly inclusive attitudes. This, mixed with the economic realities of just starting out in the working world, will likely attract them to diverse, less-expensive urban areas.
Millennials accelerated the pace of U.S. urbanization drawn by the allure of city life, and Gen Z is likely to follow suit. The difference, however, is that Gen Z puts a premium on stability, and may focus more on establishing roots through home ownership. Purchasing over renting should also appeal to their pragmatic side, and the generation’s can-do, driven spirit is likely to drive interest in purchasing “fixer-upper” houses.
While the first class of Gen Z is just starting out on their own, it’s obviously impossible to gauge an entire generation’s perspective on future home ownership. Further, so many outside factors – from interest rates to the economy to new Administration policies – could alter the real estate landscape for years to come. But make no mistake, the size and defining characteristics of this group will have a significant impact on the housing market, and quite possibly turn it on its head.