- Gen Z’s outlook on homeownership has darkened since 2019According to mortgage buyer Freddie Mac.
- Primary hurdles include student loan debt, down payments, and job insecurity.
- This is exacerbated by high mortgage rates and a scarce housing supply.
For a growing number of Generation Z, the past few years have killed all hope of being able to buy a home.
About 34% of the youngest generations—those between the ages of 14 and 25—don’t think they’ll be able to afford their own home, according to a study by Freddie Mac that was released this month. This is up from the 27% who felt this way the last time the survey was conducted in 2019, according to the report.
Some of these young people are taking to social media to express their anxiety and frustration, and to ask for help. Facebook user JJ Fay, who said she was 23, explained that she owes money — including student loan debt — but hopes there is still a way to buy a home despite the deplorable state of her credit.
“What is the best way to increase my credit?” I asked with a screenshot of a credit score of 556, which is pretty awful, according to the Insider personal finance team. Fey did not respond to Insider’s request for comment.
Faye is not alone. In fact, two of the reasons why she refrained from owning a home appeared in the study.
Among Freddie Mac’s main complaints was the weight of student debt. Of the 1,749 people who answered a Freddie Mac survey, 22% said their commitments to repay college and other academic loans were the reason they had difficulty buying a home.
About 39% in the survey said saving for a down payment made it difficult, 27% said they didn’t have a long enough credit history, 27% said their job was too precarious, and 11% indicated they were exhausted. Too much credit card debt.
On top of these difficulties, these young people also have to deal with the real estate market with fundamentals that – until recently, in some cities – make buying more difficult. In addition to 30-year mortgage rates of over 6% and a continued dearth of homes on the market, house prices are out of reach, said Pam Berry, single-family vice president of Fair Housing at Freddie Mac in a statement about the survey.
Younger Americans are also especially looking forward to becoming even more in debt on their credit cards, according to the Federal Reserve Bank of New York.
“Generation Z has taken notice, and their hopes of owning a home have diminished, as the potential problems they might have with buying a home come to the fore,” Berry said in the statement.
It’s not that these adults don’t want to own homes, according to the study — they believe owning a home provides “privacy” and “independence” — they simply can’t see how they’re going to be able to change it. financially according to the study.
However, there have been some people who have managed to beat the compounding odds and buy a home before the age of 25. Insider interviewed five of them earlier this year and found that one, to avoid a down payment, found a credit union willing to provide 100% of the funding. , and another that benefited from a government program that provides assistance to first-time home buyers.
However, the majority of Gen Z just can’t seem to be quite up to their finances, as some numbers show. For example, the average age of a first-time home buyer rose this year from 33 to 36, according to the National Association of Realtors.