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Remember when foregoing avocado toast was all the rage among millennials struggling to save their nickels and dimes in the name of becoming first-time homebuyers?
Well, now that pocket change could be put to another good use by desperate millennials and their younger Gen Z cousins: scratching off lottery tickets in search of a home-sized jackpot.
A majority of millennial and Gen Z Americans, cohorts born between 1981 and 2013, now believe their best chance at affording to buy a home is to win the lottery, according to the results of a survey released Wednesday by Zillow.
The company found disbelief among millennials and Gen Z that they’ll ever be able to afford a home — yet many are optimistic that they’ll buy one within the next five years, the survey found.
“These findings highlight the gap between Gen Z and millennials’ dream of owning a home and their ability to actually make it happen,” Amanda Pendleton, a home trends expert for Zillow, said in a statement. “Combine rising rates with record-breaking home value appreciation and it’s easy to understand why younger generations are wondering how they’ll ever be able to afford a home.”
The spike in interest rates since early 2022 means buyers are paying $431 more per month than they were a year ago for a typical mortgage. Paired with stubbornly high prices after a period of record-high price appreciation and the barrier to buying a home in the U.S. is, indeed, quite high.
Renters also got squeezed by an unprecedented spike in the price of rent, which climbed at rates far higher than the historical average in 2021 before peaking early last year. That’s making it hard to come up with a down payment for a first home.
For a typical home in the U.S. that costs $334,944, a 20 percent down payment would clock in at about $67,000. But Zillow sought to dispel the myth that buyers need such a large down payment to buy homes.
The younger Gen Zers are actually a bit more optimistic about their chances at homeownership, according to the survey results. Fifty-two percent of the generation born between 1997 and 2013 believes it would have to win the lottery to buy a home.
Fifty-seven percent of millennials, meanwhile, believe they need to hit the jackpot to buy a house. Anyone born between 1981 and 1996 is a millennial.
Just under 52 percent of millennials are homeowners, according to data from the U.S. Census.
Nearly all of those surveyed said they’d need to make changes in order to afford a home if they don’t win the lottery, including changing careers or picking up more jobs, the study found.
To come up with any down payment, more than 1 in 4 surveyed said they would need to give up all spending on clothes, dining and entertainment.
Twenty-seven percent of Gen Zers surveyed said they would need a second or third job to buy a home, compared to 39 percent among millennials.