Over the last several years, we have all heard the narrative that homeownership for young adults is nothing but an impossible goal that they may or may not achieve in their lifetime. Even our research suggests that those who are part of the generational segments Gen Z and Millennials are not homeowners at the rate that the generations before them were. Although there are multiple factors and roadblocks inhibiting many young adults from purchasing their first home, homeownership is a goal that could potentially be achieved sooner than they may think.

Figure 1: Significant Obstacles When It Comes to Home Purchases

Affordability and Home Prices Are Among the Biggest Concerns When It Comes to Homeownership 

Source: “Evolving Generational Needs: Adapting to the Future,” Raddon Research Insights, 2023. Q: In your opinion, how significant of an obstacle are each of the following to homeownership? (Select one for each statement) (n=1,507)

Before discussing the possibility of becoming a homeowner sooner than later, let’s talk about the elephant in the room – savings. While it is true that being unaware of certain programs a potential homebuyer might qualify for could be the only significant roadblock to purchasing a first home, it is no secret that saving for a down payment is a major obstacle. Regardless of affordability or home prices being high, over three-quarters of current day Millennials and two-thirds of current day Gen Z are having trouble coming up with the funds for a down payment. In fact, an article from CNBC showed that 56% of Gen Z does not have enough emergency funds saved to cover three months of expenses. This is primarily due to the rising cost of items such as rent, education, and groceries. While many of us are feeling the heat of rising costs everywhere, it seems that younger generations are taking a larger blow to their savings and checking accounts than older generations.

While purchasing a first home is a great milestone that many consumers have set to achieve, the first step in being a successful homeowner is being able to budget and save. As a homeowner, you are solely responsible for any complications with your home. There are many unexpected expenses that come up, such as issues with the water heater, bursting pipes that can cause flooding, broken cabinets, etc. If you are not set up for these types of emergencies, you can find yourself in a dangerous financial situation. Before discussing homeownership and going through the process of obtaining a home loan, these conversations need to be had. 

Figure 2: Percentage of Respondents and Whether They Experienced Difficulty in Obtaining a Mortgage

Although Millennials and Gen Z Claim Home Prices Are Too High, Most Have Not Attempted to Purchase a Home

Source: “Evolving Generational Needs: Adapting to the Future,” Raddon Research Insights, 2023. Q: Have you experienced any difficulty in obtaining a mortgage or home loan in the last 3 years? (n=1,507)

Going from Figure 1 to Figure 2, it is interesting to note that although the majority of respondents found multiple roadblocks to homeownership, more than half of current day Gen Z and Millennials have not attempted to get a mortgage. This shows that the dream of homeownership could actually be a reality for some of these younger folks. Lack of confidence and knowledge may be the only things getting in their way. Maybe some people are unaware of what they could qualify for, that there are first time home buyer programs at their financial institution, or that they might get a lower interest rate than they think. There are so many factors to consider when purchasing a first home that would not be obvious without researching them or speaking with an expert at a financial institution. Explaining home mortgage programs to your consumers can help them reach a goal they initially thought was going to take a lot longer. 

Figure 3: Top Three Factors Regarding Homeownership

Surprisingly, When It Comes to Homeownership, Millennials and Gen Z Find Renovating Opportunities Motivational

Source: “Evolving Generational Needs: Adapting to the Future,” Raddon Research Insights, 2023 Q: Below are a number of statements related to owning a home. For each statement, please indicate how much you agree or disagree by checking the box closest to your opinion. (Select one for each statement listed.) 2023 (renovating n=1,481; raising family n=1,473; better investment n=1,482) 2013 (n=147)

When discussing homeownership with younger generations, consider catering to the aspects of creativity and freedom that come with being a homeowner. Comparing consumers in their 30s and younger today to those in that age range 10 years ago, it is clear that the number one reason for wanting to own a home has not changed. Millennials and Gen Z want to be free from being confined to certain rules that go with renting and to be able to renovate and create a space that is completely their own and in their style. They want to have a home in which they can explore with colors, put holes in walls to hang up artwork, and fully develop their style and personality. Aside from the symbol of achievement and the investment that come with owning your own home, your home is a place to be yourself and create a space you want to call “my home.” 

How Do You Help Young Consumers Find a Home?

• Get to know your account holders and their goals

   

• Educate on homeownership – what it means to your account holders and how they can reach this goal

   

• Help your account holders understand that there are benefits to applying for a mortgage – maybe they need some education on increasing their credit or help budgeting to eliminate debt, or maybe they qualify for a home loan they didn’t think they would qualify for in the next 10 years

   

• Showcase the freedom and creativity they’ll have when they own their own space

   

  Homeownership is more than an accomplishment and a status symbol, it is a place of freedom and comfortability.