Freddie Mac states that Generation Z homeowners have a more positive view of homeownership than millennials of the same age.
Prospective Generation Z homebuyers believe they will attain homeownership by the time they turn 30, which is three years younger than the current homebuying age (33).
“The data show that while members of Gen Z clearly aspire to homeownership, they are realistic about potential barriers and understand the potential benefits of renting,” said David Brickman, CEO, Freddie Mac. “Although these results are good news for the housing markets, they also highlight the challenges many in Gen Z will face as they enter the market to rent or buy.”
Data from the survey shows that 77% of Generation Z homeowners would choose to live in a single-family home over other types of homes, which is more than half (59%) report their ideal home would be medium-sized.
Also, 35% would choose to live in a suburb of a big or medium-sized city, with another 30% preferring to live in a rural area or small town.
Freddie Mac also says that fewer 18-23-year-olds of Generation Z see renting as more appealing than buying a home versus millennials at the same age — 19% compared to 30%.
Fewer also believe renting makes you feel like part of a community (33% to 39%) and less perceive that is costs less to rent a home than to own a home (40% to 51%).
“One of the biggest challenges Millennials face today is the lack of affordable starter homes,” said Sam Khater, Freddie Mac’s Chief Economist. “Given Gen Z’s desire for suburban medium-sized homes close to urban areas with amenities, demand for entry-level homes will intensify.”
The FTB uses the ratio of home prices to income for each individual buyer. San Jose, California, was the least affordable metro with a ratio of 5.3. Both metros have occupied the top and bottom rank since 2014.
The report states that across the 50 metros studied, the average FTB ratio was 3.3, which means first-time buyers spent 3.3 times the household income to purchase a home.