AUSTIN — Forget about the millennials.
The hot new housing segment real estate agents and builders are eyeing is Generation Z.
That’s the group of Americans born right after the millennials.
“Right now the oldest segment of Generation Z is 24,” said Dave Mele, president of Homes.com “Millennials are the largest segment of today’s homebuyers.
“They are larger than millennials in terms of size.”
Currently millennials make up about a third of the U.S. homebuying market compared with Generation Z’s 27% population share.
But by 2026, Gen Z is expected to be the largest U.S. demographic group with about 82 million consumers.
That’s why home sales industry players including Mele are focusing on this upcoming group.
And, he says, he’s encouraged that more Generation Z members say they want to own homes.
A Home.com survey found that 87% of Gen Z members say they intend to buy before they are 35.
“That’s a fairly staggering number,” Mele said at the National Association of Real Estate Editors’ meeting this week in Austin. “That’s 20 points higher than the overall homeownership percentage in the U.S.”
The current strong economy may be a factor in Gen Z’s positive perceptions about homebuying.
“It has come of age in a different time period,” Mele said. “ Millennials entered homebuying really right after the largest financial crisis since the Great Depression.
“Generation Z is entering at a time of economic prosperity.”
Mele said the upcoming generation of U.S. homebuyers has different priorities from their elders.
Home.com found that 48% of Gen Z buyers are racial and ethnic minorities.
“Fifty-eight 58% of our survey respondents said they’d prefer to live in a racially and ethnically diverse neighborhood,” Mele said. “That has really big implications.
“That could change what our neighborhoods look like.”
The Generation Z members Homes.com surveyed were also more likely to be unmarried – either singles or couples – than previous homebuying groups.
And they want to live close to where they work.
More than 70% of Gen Zers listed proximity to work as the top factor driving their homebuying locations.
“They are going to follow work,” Mele said. “If it gets too expensive for companies to have their workspace in the cities and they move to the suburbs and exurbs, Generation Z says they are going to follow that.”
The youngest generation of homebuyers is also worried about housing affordability.
Making enough to afford a house, coming up with a down payment and paying off student debt are top concerns.
“This generation understands that they have to save,” Mele said. “They are willing to make sacrifices to save.”