Understanding Future Gen Z Homebuyers

Although Millennials still make up the majority of current homebuyers at 38%, the following generation is quickly approaching homeownership. This intriguing cohort known as Generation Z has members now turning 24, and a majority of them are expecting to buy their first home in the next five years. While they face the challenge of the current market and the long-term effects of the pandemic, they remain optimistic about the future.

Boasting both similarities and differences from their Millennial counterparts, Gen Zers have their unique views on homeownership. Understanding this specific cohort’s characteristics will help you learn how to connect with them as they transition from renters to homeowners.

Check out this insightful infographic from Realtor.com that further explains other Gen Z preferences.

A Brief Overview of Gen Z

Also known as Zoomers or Post-Millennials, those born from 1997 – 2012 are considered Generation Z. Similar to Millennials in some ways, Generation Z differs from their counterparts due in part to their parents, a strong economy, and low unemployment.

They’re also unique from their predecessors in that they are:

• Much more ethnically diverse than ever before
• Set to be the most well-educated generation to date
• Have only known a world where information is at their fingertips

According to the Pew Research Center’s findings, roughly 1-in-5 Gen Zers are Hispanic, and only 52% are White. Rewind to the early Boomers of 1968, where 82% were White and only 4% were Hispanic, and the demographic shift is undeniable.

What Gen Z Wants in a Home

While previous generations pursued homeownership under the American Dream, Gen Zers pursue homeownership for different reasons.

Top Reasons Gen Zers Want a Home:

• A place to call their own
• The investment benefit of homeownership
• A good space for their pets
• Safety in a home
• Being a part of a community

They’re more particular about where they want to live, too – location, location, location. The most critical factor in a Gen Zer’s decision process for a home is being close to their work. Following that, they want to be near family and friends.

On top of location, 58% of those surveyed by Homes.com said that being a part of an ethnically diverse neighborhood is a priority for them. This response reflects their more balanced mix of White, Black, Hispanic, and Asian backgrounds than previous generations. That said, it’s crucial to be very inclusive in your practices and marketing as well.

Real Estate Tech Innovations

Gen Zer’s comfort with smartphones and accessing information means they’re a well-informed group of individuals. With the shifts in online home shopping such as mortgage rate comparison, iBuying options, and tools like Zillow’s Zestimate, Gen Zers can access much more information than homebuyers from the late 90s. Expect them to come to the table more prepared.

As an agent, you should be using PropTech and advanced marketing tools because it will help make a listing stand out. Good photography and accurate details on the home is only the beginning.

Examples for Real Estate Agents:

• Virtual tours
• Virtual staging
• Aerial photography
• “Live” videos on social media

When working with your seller, don’t dismiss the power of Smart Home technologies to sweeten the deal with a Gen Zer either. 65% of homebuyers surveyed by John Burns Real Estate Consulting admitted that they’d be willing to pay more for homes with the tech already installed.

Examples of Smart Home technologies:

• Smart thermostats
• Solar panels
• Smart doorbells or door cameras
• Smart appliances (fridges, washers/dryers)

As a Title or Escrow Agent, having convenient methods for communication and being up to date with eClosing solutions is going to be essential. Gen Z’s passion for technology is specific to tools that make something more streamlined, not necessarily tech that wows someone or complicates things. Additionally, they are likely to have questions about the process, and offering online chats or informational resources will help put a Gen Zer at ease.

Examples for Title and Escrow Agents:

• AI-powered chatbots (like Alanna)
• Closing cost calculators
• Remote Online Notarization (RON)
• eClosing technologies (eRecordings, eSignatures)

Gen Zers Are More Optimistic Than Millennials

This generation is not going to delay the process when it comes to owning their first home. According to the Homes.com survey, a whopping 85% of Gen Zers plan to own their first home before the age of 35. 

While Millennials opted to rent for longer, Gen Zers looked at their parents as inspiration. Parents weren’t the only role models for them, though – Zillow reported that social media influencers have also led them in the direction of homeownership, specific to their purchasing rationale for a new home. The influx of social media posts related to homes, DIY projects, and other related topics has spurred a “fear of missing out” in younger generations causing them to want to purchase a home sooner rather than later.

Affordable Cities and Single-Family Homes Are Ideal

Being somewhat thriftier than their predecessors, Gen Zers are focused on affordable housing – which is increasingly an issue for them right now as housing prices soar and demand outpaces the supply of new homes. They’re steering clear of expensive coastal cities and instead of migrating inland to combat the current conditions.

Top 10 cities where Gen Zers are buying homes:

1. Salt Lake City, Utah
2. Oklahoma City, Oklahoma
3. Indianapolis, Indiana
4. Cincinnati, Ohio
5. Minneapolis, Minnesota
6. Kansas City, Missouri
7. Phoenix, Arizona
8. Louisville, Kentucky
9. St. Louis, Missouri
10. Buffalo, New York

While they were set to be the generation supported by a strong economy and low unemployment, the pandemic has affected them heavily. Nearly 3 million Gen Zers were forced to move back home with parents or grandparents after the onset of the pandemic. On the bright side, a majority of them plan on using the money they saved to make a down payment for a home.

Additionally, with fewer ambitions geared towards raising a family, the ideal home for a Gen Zer offers an open layout and outdoor amenities. Their dream home would be a “detached, single-family home… with a patio or deck.”

Successfully Connecting with Generation Z

Whether you’re a real estate agent or a title professional, there are specific ways to connect with this generation successfully. The use of the latest technology plays a considerable part in formulating that connection with this tech-savvy generation – 90% of homebuyers already begin their process online.

Be Online and Offer Informative Resources

Gen Zers are used to checking the web for information about a person or company before working with them – put simply, they’re going to Google you. They’re looking for a solid online presence to verify a company or professional before even having a conversation with them. 

Word of mouth referrals are still valuable, but they may hesitate if your website doesn’t provide enough information as well. Additionally, negative reviews will steer them away from you – making sure you’re responsive to comments in a respectful manner is essential.

Information on your website should be helpful in their understanding of the homebuying process too. Freddie Mac found that 54% of Gen Zers will turn to the web or apps for real estate and mortgage information. In the same vein, 65% of those surveyed felt that they weren’t confident in what the mortgage process entails. Prioritizing your marketing efforts to offer content will help them trust you as an expert.

Use Social Media and Stay Mobile-Friendly

While a website is a crucial starting point, a genuine connection with this generation will come through a solid social media presence. However, Gen Zers prefer to use Snapchat, TikTok, and Instagram – don’t waste too much time on alternative platforms like Facebook, Twitter, and LinkedIn.

While blogs and long-form marketing efforts can be helpful, this generation is accustomed to scrolling social media feeds for information. That said, quick-to-read and digestible information is the key to attracting their attention at first.

Lastly, As Gen Zers grew up with smartphones in their hand, it’s the primary method for their research. If your website is not mobile-friendly and streamlined, they won’t bother to stay and dig for information. The National Retail Federation found that “over 60% of Gen Zers wouldn’t use an app or website that loads slowly.”

It’s no secret that Gen Z and Millennials have overlapping characteristics leaving most real estate professionals in a good position to work with this new generation of homebuyers. However, their distinctive traits relate mostly to the use of technology, their ambitious goals for buying a home, and an attitude of frugality.

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