The American dream of homeownership is not dead, even for Gen Zers and millennials, but according to Zillow research, they believe their path to get there will be challenging and may even require some luck, given the affordability challenges facing many buyers today.
Zillow found 52 percent of Gen Zers and 57 percent of millennials who don’t currently own a home believe they’d need to win the lottery to afford one.
Outside of winning the lottery, large shares of both generations (95 percent of Gen Zers and 94 percent of millennials) say they would have to make some life changes in order to make their dream of homeownership a reality.
About 40 percent of millennials say they would need to get a second or third job, and 28 percent of Gen Zers say they’d have to make a career change in order to afford a home right now, according to Zillow.
Zillow data shows the housing affordability crisis is the worst it’s been in at least 15 years. Home values are up 3 percent over the past year, but during the peak of the pandemic, home values were rising in the double-digits. Record-fast home value growth has already been squeezing budgets, and now rising mortgage rates are compounding the affordability challenges many buyers are facing.
“These findings highlight the gap between Gen Z and millennials’ dream of owning a home and their ability to actually make it happen,” Zillow’s home trends expert Amanda Pendleton said in a release. “Mortgage rates have been on the rise since last year, sending monthly housing costs through the roof — the typical monthly mortgage payment is now $431 higher than a year ago. 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.”
To put the down payment challenge in perspective, 20 percent down on the typical U.S. home ($334,944) means coming up with nearly $67,000. In pricier markets, a down payment can easily exceed six figures.
Still, these two generations are optimistic about the future. About two-thirds of the Gen Zers and millennials surveyed say it’s realistic to think they can buy a home within the next five years, Zillow said.