The seemingly perennial question around owning or renting is coming into play for the Gen Z demographic as much as it is for Millennials. It turns out that Gen Zers (95%) want to own a home even more than Millennials (90%) do, according to a recent study by Apartment List.
Such data is substantiated by Freddie Mac’s recent study that indicates only 19% of Gen Zers found renting more attractive than owning while 30% of Millennials found renting to be more attractive.
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Freddie Mac’s CEO David Brickman said, “The data show that while members of Gen Z clearly aspire to homeownership, they are realistic about potential barriers (to homeownership) and clearly understand the benefits of renting…Gen Zers expect to own their own home by the age of 30, three years younger than the current median home buying age.”
Along with their desire and expectation to own a home and their financially conservative mindset, Gen Zers are also in a better position credit-score-wise to own a home than Millennials. With the average FICO score being 632, Gen Zers come in with an average credit score of 637 while Millennials come in with an average FICO score of 629 and Gen Xers come in with 632. Only Boomers “outscore” Gen Zers with 645. Additionally, Gen Zers have the lowest debt rate of all demographics at 9.9% while the national average is 17%.
The fact that Millennials came into the housing market at a time when the economy was characterized by the collapse of the housing market, rapid growth in the cost of housing and worsening income inequality may have something to do with the differences between Millennials and Gen Zer’s personal expectations of homeownership. Sam Khater, Freddie Mac’s chief economist, said, “…economic uncertainty – characterized by relatively low homeownership rates, delayed marriage and smaller families – has become a central tenet of the Millennial identity.”
No wonder 12.3% of the 90% of Millennials who want to become homeowners never expect to be able to achieve their homeownership goals.
Disproportionate generational wealth also plays into whether or not Millennials will be able to achieve homeownership goals. Millennials now earning more than $100,000 annually expect to get “help” from their families in order to buy a home…$31,748 worth of help. On the other hand, Millennials now earning $25,000 annually expect to get $5,000 of “help” from their families in order to buy a home.
Thanks to HousingWire’s Maleesa Smith for source data.