Nine out of 10 Generation Z homebuyers, the youngest group to wade into the housing market, plan on using an agent to buy a home.
The finding flies in the face of assumptions that digitally native youngsters will look to buy homes with new tech-powered services, or go it alone. The survey, which polled more than 1,000 adult Gen Zers aged 18 to 24 years old, also offers some insight into how agents could reel in business from the demographic.
“We hear a lot about iBuyers and some platforms that are working to take agents out of the transaction,” said Homes.com President David Mele during a presentation Thursday morning at the annual conference of the National Association of Real Estate Editors, hosted this year in Austin, Texas.
“Generation Z is saying not so fast.”
The oldest members of Generation Z, born between 1995 and 2012, are now in their early 20s. In contrast to their millennial elders, Generation Z has “never known a world without digital connectivity,” Homes.com noted in a blog post. And the most senior Gen Z-ers are coming of age during an era of full employment, rather than economic crisis. Numbering up to 75 million, they are larger and significantly more diverse than millennials, according to Mele.
Forty-eight percent belong to racial or ethnic minorities, according to the Homes.com survey. So perhaps it should come as no surprise that a majority say they’d prefer to own a home in an ethnically or racially diverse community.
Mele called their overwhelming preference for using agents a “surprise,” given that buyers have “all info at their fingertips” these days.
The survey also offered deeper insight into what young Generation Z adults are looking for from agents. Among the young people, 27 percent said the quality they expect most from an agent is the ability to understand “what I want.”
Meanwhile, 18 percent of those surveyed said “knowledge of the local market” was of high importance, followed by experience at 15.2 percent and negotiating skills at 9.1 percent.
Only 7.3 percent considered “cost” a top concern.
“They’re saying that the quality of the agent and the ability to understand them is more important” Mele said.
The survey also called into question a narrative hawked by Silicon Valley: a supposed desire among young people to be “flexible and nomadic,” as Mele put it in his presentation. Turns out most members of Generation Z don’t want to bounce around the world like ping pong balls.
Eighty-six percent of those surveyed want to buy a home before they turn 35. If history is any judge, many will be disappointed. The overall homeownership rate, which includes older, wealthier Americans as well as millennials and members of Generation Z, clocks in at approximately 64 percent.
But those surveyed don’t appear to be oblivious to these obstacles. Forty-two percent listed making enough money to afford to buy a home as their top barrier to homeownership. That was followed by saving for a down payment (21 percent) and student loan debt (20 percent).
Spreading the word about the potential to buy with low down payments could be one way for agents to reel in Generation Z clients.
Sixty-four percent expect to pony up 11 percent or more for a down payment, while a quarter anticipates saving for 20 percent.
“We have work to do in educating Gen Z about what it takes to own a home,” Mele said in his presentation. “They’re setting a higher bar than they actually need to cover.”
The average first-time buyer only puts down 6 to 7 percent, he said.
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