(This article was originally published in NextMove, our weekly newsletter on the housing market. Sign up for it using the box below.)
I’ve been wondering lately if I’ll ever be able to afford a house. I say this as a recent college graduate who has no plans of buying a home in the immediate future. But, someday I’d like to.
This is Katherine Watt with NextAdvisor. Jon Reed has the week off.
I’m a member of Generation Z, the group born between 1996 and 2012, also known as Zoomers or the influencer generation. Some of us entered adulthood in lockstep with the COVID-19 pandemic and the affordability crisis in the housing market.
So it’s not surprising a recent study from Credit Karma shows that nearly 30% of Americans between the ages of 18 and 25 still live at home or with extended family.
Our generation is going to face the largest gap between average income and average home prices in 70 years, according to Longtermtrends, a financial markets data provider. In July 2022, the average house was over seven times more expensive than the yearly median household income.
But that statistic doesn’t mean that homeownership is only folklore for us.
I get to talk to housing market experts every week to seek their advice for hopeful homeowners. So here’s what I’m doing to get ready, even if Mom would be just as happy if I never left.
Block out the noise. Gen Zers and millennials are noting how the housing market just isn’t the same as it was for our parents, and that mortgage rates are no longer at the low percentages from even recent years. But homeownership can still be in the picture with some careful planning and due diligence.
Sit yourself down and make a budget. This is eternal advice to make sure you’re not reaching beyond your means. You may even consider starting a sinking fund where you save a little bit each month toward a future down payment. If you’re already saving for retirement, why not start saving for your first home?
Look into affordable housing programs or lotteries in your area. Even if you’re right out of college, take a look at affordable housing lotteries. They have lists in most cities and if you get on them now, it could happen for you in six years or so. If you’re ready to buy now, check out if your state offers first-time homebuyer grants and assistance programs.
Consider townhomes or condos. Condos and townhomes are gaining popularity among millennials as starter homes because of their affordability and flexibility. Your first home may not be your dream home, and that’s OK.
Cramped apartments and childhood bedrooms are not the only options for us Gen Zers. Start taking steps now to help you prepare for the housing market down the road. I’ll be right there beside you.