How to Prepare for Gen Z's Transition Into Homeownership
Just when you thought you had mastered marketing to millennials, it's time to prepare for a new generation of homebuyers: Gen Z. According to realtor.com®'s fourth quarter generational propensity report, these tech-savvy adults now own about 2% of the homes on the market.
So, what does this mean for real estate agents? Besides the obvious advice to jump on the TikTok bandwagon to get in front of these consumers, Generation Z's desire to get out of big cities and into urban and suburban markets could mean a growing need for real estate agents in these areas.
Here's a snapshot of what to expect from this emerging demographic.
What Can Gen Z Afford?
Realtor.com® recently revealed that Gen Z is poised to surpass millennials when it comes to spending power.
Jason Dorsey, president of the Center for Generational Kinetics (a Gen Z and millennial research firm), says that as of December 2020, Gen Zers were spending a median price of $106,600 on starter homes.
That number is 37% less than what millennials are currently spending and 46.5% less than the $300,000 national median. But it's an 11% jump from what Gen Z buyers spent the year before.
Another defining characteristic is a lower down payment than their millennial predecessors or Gen X parents.
Rather than the traditional 15% - 20% down payment, Gen Zers are putting down 5% just to get their foot in the door despite the higher monthly payments.
Where Is Gen Z Looking to Buy?
In 2020, Gen Z homebuyers took out the most mortgages in Toledo, Ohio—a much more suburban environment than you might find their millennial counterparts. Other cities that saw an influx of Generation Z homebuyers were Grand Rapids, Wichita, Virginia Beach, Winston-Salem, Scranton, Oklahoma City, Cincinnati and Baton Rouge.
Most are college towns with strong local economies, suggesting that this first wave of Gen Z homebuyers tend to settle down in the same city where they attended college.
How to Connect With Gen Z Homebuyers
If you guessed that the best way to connect with Gen Zers is online, you guessed correctly.
While they have this in common with millennials, Gen Z buyers are even more entrenched in online content and tend to trust those who position themselves as "influencers."
To earn their trust, show up consistently on platforms like Instagram, TikTok and Snapchat with bite-sized, practical content.
Content can include topics such as, how to save for that first down payment, an explanation of the lending process and other tips that help "demystify" the home-buying experience.
If you're interested in working with this demographic, don't be afraid to think and create outside the box.
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