6 Mistakes Gen Z Is Making When Saving For a House
Written by
Jordan Rosenfeld
Edited by
Zuri Anderson
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Generation Z may be young, between ages 12 and 27, but the eldest are already planning for their futures, including saving to buy their first homes. They’re doing so at an interesting time in the housing market when it’s easy to make mistakes.
After dramatic movement in the early days of the pandemic, the housing market has come to a near standstill in the last year or so, with buyers who locked in low mortgage interest rates holding on tight to their homes, limiting supply, to name one reason.
While Gen Zers may have more access to financial and real estate information than their elder peers did at their age, they’re making a few mistakes that might hold them back from the homes of their dreams.
They Are Quick To Believe What They See Online
While Gen Zers are more likely to access financial information quickly, through apps and online than many older folks, it has a downside, according to llan Bracha, the CEO and founder of the real estate brokerage firm, IB Global.
“Gen Z is a generation that basically grew up digital. They think differently, they’re very fast, but they also believe what they see on TikTok and Instagram,” he said.
They Take Advice Without Researching
What this means, Bracha said, is they have a tendency to take information at face value and often without doing enough research.
He suggested they slow down and vet their sources more carefully. Just because someone said it online does not make it good advice, he warned.
They Expect Speed
Perhaps as a result of growing up as digital natives, patience may not be their best virtue when it comes to real estate, Bracha said.
“Their expectation is that everything needs to [happen] yesterday,” he noted.
Bracha added that, in terms of real estate, Gen Z can be “impulse driven” and “very fast to make decisions.” The problem is that real estate “is a long-term play,” he said.
“You can see results in five, seven years, sometimes 10 years. So if you’re investing and not waiting for tomorrow, it’s not happening.”
Their Knowledge Outreaches Their Resources
While a lot of Gen Zers who are working in the markets that Bracha sees are doing pretty well for themselves financially, their desire for things to move quickly, coupled with greater access to information, often sets them up to have real estate desires that are beyond their reach at this time.
This can lead to setting their sights on properties that they won’t be able to afford.
They’re Not Buying Homes To Live In
While Bracha can’t say for sure that this next trait of Gen Zers is a mistake, he noted that “Their appetite to buy a first home is not as strong as it used to be in generations before,” he said.
Instead, when they do invest in real estate, it tends to be in income producing rental properties.
“They can take this income and rent again and then use this income for their own rentals, giving them more flexibility,” Bracha explained.
While on the one hand, this is giving them cash flow, and they might be leaping onto properties that won’t continue to deliver a return on their investment over time, he said.
They’re Taking Bigger Risks
Gen Zers hunger to buy a home and invest in real estate sometimes leads to risk taking that doesn’t always pay off. That said, Bracha praised them for this mindset anyway, since taking risks is a key part of investing.
“Those kids, maybe some of their investment is not as smart, but they’re investing,” he said.
With a little patience, research and willingness to commit to a longer savings window, Bracha feels confident that Gen Zers will grow into savvy homebuyers and real estate investors.
They do have the benefit of time on their side, and make an effort to learn about finances in ways that many older generations did not.
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