NEW YORK — Generation Z remains interested in homeownership, but many younger buyers would rather move to another city or state than stretch their budgets to purchase a home, according to a new NewHomeSource survey and an analysis that suggests mortgage lenders need to refocus their efforts.
Nearly two-thirds of Gen Z respondents, 63%, said they would relocate to another city or state to afford a home, while just 19% said they would increase their housing budget.
The findings suggest younger buyers may be taking a different approach to affordability — determining what monthly payment they can handle and then searching for locations where that amount will buy the type of home they want, National Mortgage Professional reported.
A Different Approach
“The goal of owning a home is still absolutely there for this generation, but they’re approaching it differently,” said Ali Wolf, chief economist at NewHomeSource and Zonda, which powers the new-construction marketplace. “Rather than stretching financially to buy as soon as possible, they’re setting clear financial boundaries and expanding their search, often across city or even state lines, until they find the home that fits their budget and lifestyle.”
The survey found 39% of Gen Z respondents plan to purchase a home within the next five years.
The Compromises
Among the compromises they would consider to make homeownership possible:
- 35% would relocate to a less expensive area within their state.
- 33% would consider a different neighborhood.
- 28% would move to a more affordable state.
- 19% would increase their housing budget.
Most respondents said they would not increase their monthly housing costs by more than $300, with the largest group willing to add no more than $150.
The findings also indicate Gen Z buyers are more willing to compromise on location than on the characteristics of the home itself.
A large backyard and garage were each cited as priorities by 32% of respondents, followed by a pool at 28% and a large kitchen at 27%. Respondents were more willing to relocate than buy a smaller home, accept lower-quality finishes or give up desired neighborhood amenities.
Looking to the ‘Burbs
The suburbs were the preferred location for 53% of respondents, particularly suburban communities offering walkable, urban-style amenities.
“Previous generations often bought a home first and built their lives around it,” said Karyn Bonder, NewHomeSource design trends expert. “Gen Z is doing the opposite. They’re waiting until they have the lifestyle they want, then looking for a home that supports it.”
Nearly half of those surveyed said they were considering relocating, but housing affordability was not the leading reason. Lifestyle and quality of life ranked first, cited by 27%, followed by a new job and proximity to family, each at 21%. Affordability ranked sixth.
A Need to Refocus
National Mortgage Professional said the results suggest mortgage lenders working with younger buyers may increasingly need to focus on where a desired monthly payment can work rather than simply how much a borrower can qualify to borrow.
That could require comparing total housing costs across communities or states, including home prices, property taxes, homeowners insurance, mortgage insurance, association fees and available assistance programs.
The trend could also increase the importance of multistate licensing and referral relationships for mortgage originators as prospective buyers expand their searches beyond their current markets, National Mortgage Professional said.
