I am the CEO and co-founder of RentSpree, and I write about real estate. RentSpree rediscovers how people rent houses.
For some Generation Zers, buying a home feels like it’s getting out of reach in today’s housing market. This sentiment is especially reinforced when Gen Z is inundated with news such as all-cash buyers sweeping houses†
It is essential for the real estate industry to prepare for this generation to enter the market. The elders of Gen Z are just graduating from college or starting their career path, and many are saddled with student loans and possibly very little money saved. But according to a new survey from Rocket Homes, 80.6% of Gen Zers underestimate how much it costs to buy a house. This gap underlines the lack of knowledge of the real estate market among this generation. However, it also shows that most Gen Zers don’t want to rent forever and are eager to get into the buyer’s market.
In order to maintain a healthy real estate market, it is essential to provide the tools for the needs of the younger generation when buying a home. The industry has changed a lot and unfortunately the path to home ownership is not taught in schools in the US report from CNBC“There are no federal guidelines for personal financial education in schools, which means it’s up to individual states to set their own rules.” That’s why it’s essential for landlords and real estate investors to meet Gen Z where they are in their real estate journey.
Buying a home is generally complicated for first-time homebuyers, so how can real estate professionals, brokers and brokers help this new generation get off to a strong start in a challenging market? Here are some strategies:
Be the resource they need.
Rents are skyrocketing and many Gen Z members are trying to weigh their options whether renting is the right choice for them. Despite the challenges this generation currently faces, it is up to real estate professionals to help these prospective home buyers as their purchasing power is ultimately expected to increase. $33 trillion† Providing Gen Z with a digestible roadmap with clear messages and milestones to work towards is a great way to guide this generation through renting and their homeownership journey.
Emphasize the importance of investing early.
It’s easy for the real estate industry to write off this generation as burdened with bad credit and debt. Although Gen Z a average debt of $16,043According to data from Experian, time is the most important factor that Gen Z has on its side. Gen Z has the time to build strong financial habits for the rest of their lives. In fact, the Rocket Homes survey found that 86.2% of Gen Z want to buy a home, and nearly 45% want to buy their first home in the next five years.†
Until they can buy a house, renting is a practical option with fewer obligations. Renting has its perks, including no maintenance fees, no property taxes, affordable renter insurance, and flexibility to move wherever they want. But it’s important to help them understand that the current competitive nature of the housing market and low inventory also trickles down to the rental industry.
When they decide to move beyond just renting and buying their first home, I’ve found that most are also unaware of the resources available to them, such as Federal Housing Administration (FHA) loans. Industry professionals can share information about this loan, which requires a minimum deposit of 3.5%, and other options. Loans like these can be a very viable method for Gen Z to make a down payment and start their real estate investment journey.
Embrace real estate technology.
About 74% of Gen Zers spend their free time online, according to the Institute of Business Management. Proptech is opening many solutions to help Gen Z tenants and real estate agents targeting this demographic. For example, proptech allows real estate agents to check which tenants may be ready for home ownership using a rental client management tool. Keeping an eye on the tenants who can afford high rents usually means they can afford a mortgage.
Research shows that Gen Z sits on phones like no other generation. For real estate investors and landlords, this is crucial to understand. Knowing that Gen Z is used to pulling out their phones and swiping on apps, embracing technology in Gen Z real estate transactions is a natural conclusion. There is now a plethora of proptech tools available to landlords, which was not the case a decade ago. Using this technology can lead to a more efficient process and happier tenants. For example, tenants can securely pay rent online, submit maintenance requests, purchase renters insurance, apply for a rental unit, and sign their lease all online. (Full disclosure: My company offers proptech, as do others.)
Lean into their use of social media.
Gen Z is extremely attuned to the internet and social media. This is a great opportunity for real estate investors to have a stake in the game. The real estate industry should prioritize content creation for the platforms this generation is already frequenting. These could be real estate agents organizing real estate tours on YouTube or tips and tricks on TikTok for reaching this growing clientele. It’s also worth developing a robust SEO strategy to see at the top of that search page.
Sales tactics that worked for previous generations may not have the same effect on Gen Z. It has been noted that the younger generations can be highly skeptical due to their exposure to more information at their fingertips than any other generation. This will present a learning curve for anyone in the real estate industry, so understanding how Gen Z works now is essential.
Seeing the market through Gen Z’s eyes is critical for real estate investors, professionals, brokers and brokers to help this younger generation succeed. After all, effectively analyzing this current climate will impact industry practices and ultimately help agents build their business and customer base.