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The Truth About Homeownership for Gen Z
The American dream is homeownership, and many aspire to own their homes. It allows you to build wealth and control your future finances.
Although owning a mortgage is complex, having both rental income and a mortgage is an attainable future goal. However, the Gen Z generation, born after 1990, has different ideas about homeownership.
Homeownership was viewed as a male privilege in the past, but for Gen Z women, it's an attainable goal. The Gen Z generation is willing to work to achieve this goal effortlessly.
Gen Z, unlike older generations, wants to buy a home.
Gen Z'ers are much more interested in renting than the older generation.
A Zillow report shows that 53% of Gen Z'ers dream of owning a home at age 18–21.
However, compared to the older tenants, Gen Z'ers range in rent at $735 monthly. Gen Z'ers have little understanding of their finances and have high expectations of their rental dreams.
Although homeownership is considered a dream come true, it's more expensive for Gen Z tenants than for older ones. A Zillow report proves that in the United Kingdom, the average homeowner is 41 years old. Almost six years older than renters.
Experts recommend Gen Z start considering owning a home after 30 years when they are more financially stable to handle homeownership responsibilities without going into debt. For the Gen Z generation, it's easier to qualify for a mortgage with no financial history. At least in Gen Z, new homeowners at least understand the benefits of owning vs renting.
Advantages of Homeownership
Homeownership among young adults has been resurgent over the last few years due to the Gen Z mindset, lower interest rates, and accessible credit. In Gen Z, there is a higher possibility of rising homeownership than in previous generations.
They also find it easier to get a home in the United States than the previous generation. For Gen Z, homeownership is a good investment plan since they enjoy total control over their home environment and reduce their monthly expenses.
Homeowners can quickly sell their houses at a profitable price, add a jogging path or swimming pool, and have security and peace of mind. They can also take advantage of the tax breaks. Other privileges include selling homemade goods at your homestead and organizing homebuyers' tours.
Factors to consider when buying a home
Location and the house's size are the most crucial factors when owning a home. Location and size contribute to housing costs comprising a significant portion of an individual's budget.
Home affordability is another critical factor, but its consideration should not override other factors. Gen Z needs to look at real estate through its short-term needs and long-term financial goals.
Gen Zers are looking for a home they will live in for the next few years and what it means for their future. A good location goes hand in hand with the security of the place, school, and work.
House size is another factor, and purchasing something that will accommodate your lifestyle for years is essential.
Ways to consider buying a home
Gen Z should consider purchasing a house through a traditional mortgage. This type of loan can be costly since it requires a hefty down payment.
Cooperatives are another option Gen Z should consider. They allow members to purchase shares of the cooperative and have their downsides and benefits.
Unlike the traditional mortgage, the condominium offers mobility, flexibility, and lower down payments but higher monthly costs than leasing or renting rates.
Whether conventional loans, cooperatives, or condominiums, they all have benefits and drawbacks. Although Gen Z is the most diverse, well-educated, and affluent generation, their desire for community living might experience higher rates.
Why it's essential to consult a financial adviser before making a purchase
Financial advisers are experts at helping people create and stick to financial goals. The advisers help you consider your needs and what's affordable before purchasing. Allow one to avoid a cycle of debt. Before making a financial decision, Gen Z should consult with a financial adviser to avoid trouble in future. A financial adviser can help address the needs of Gen Z in terms of building wealth, retirement, and emergency planning.