I’m the CEO and co-founder of RentSpree, and I write about real estate business. RentSpree is reimagining how people rent homes.
For some Generation Zers, buying a home feels like it’s slipping out of reach in the current housing market. This sentiment is especially reinforced when Gen Z is inundated with news such as all-cash buyers sweeping up houses.
It’s essential for the real estate industry to start preparing for this generation to enter the market. The oldest of Gen Z are just now graduating college or kicking off their career paths, and many are burdened with student loans and possibly very little money saved. Yet, according to a new Rocket Homes survey, 80.6% of Gen Zers underestimate how much it costs to purchase a home. This gap underscores this generation’s lack of real estate market education. However, it also shows that most Gen Zers do not want to rent forever and are eager to get into the buyers’ market.
To maintain a healthy real estate market, providing the tools for the younger generation’s needs on how to buy a home is essential. The industry has changed immensely, and unfortunately, the path to homeownership is not taught in schools across the U.S. According to a report from CNBC, “There are no federal guidelines for personal finance education in schools, meaning it’s up to individual states to set their own rules.” Therefore, it’s essential for landlords and real estate investors to meet Gen Z where they are at in their real estate journey.
Buying a house is generally complicated for first-time homebuyers, so how can real estate professionals, brokerages and agents help this new generation get off on a strong start in a challenging market? Here are some strategies:
Be the resource they need.
Rent is skyrocketing, and many members of Gen Z are trying to weigh their options on if renting is the right fit for them. Despite the challenges this generation currently faces, it’s up to real estate professionals to help guide these future homebuyers since their purchasing power is eventually expected to be $33 trillion. Providing Gen Z with a digestible road map with clear messaging and milestones to work toward is a great way to guide this generation through renting and into their journey to homeownership.
Emphasize the importance of investing early.
It’s easy for the real estate industry to write this generation off as being saddled with bad credit and debt. Although Gen Z has an average debt of $16,043, according to Experian data, the most significant factor Gen Z has on its side is time. Gen Z has 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 purchase a home, and nearly 45% are looking to purchase their first home in the next five years.
Until they can buy a house, renting is a practical option with fewer strings attached. Renting has its benefits, including no maintenance costs, zero real estate taxes, affordable renters insurance and flexibility to move wherever their hearts desire. But it’s important to help them understand that the current competitive nature of the housing market and low inventory trickles down to the rental industry, too.
When they decide to go beyond renting and purchase their first home, I’ve found that most also aren’t aware of the resources available to them, like Federal Housing Administration (FHA) loans. Industry professionals can share information on this loan, which requires a minimum of just 3.5% for a down payment, and other opportunities. Loans like this one can be a very viable method for Gen Z to secure a down payment and start their real estate investment journey.
Embrace property technology.
Approximately 74% of Gen Zers spend their free time online, according to the Institute of Business Management. Proptech opens many solutions to help support Gen Z renters and real estate agents focused on this demographic. For example, with proptech, real estate agents can monitor which renters might be ready for homeownership using a rental client management tool. Keeping tabs on the renters that can afford high rent prices typically means they can afford a mortgage.
Research shows that Gen Z is on phones like no other generation. For real estate investors and landlords, this is crucial to understand. Knowing 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 are now a plethora of proptech tools at landlords’ disposal, which was not the case a decade ago. Using this technology can lead to a more efficient process and result in happier tenants. For example, renters can securely pay rent online, make maintenance requests, purchase renters insurance, apply to a rental unit and sign their lease all online. (Full disclosure: My company offers proptech, as do others.)
Lean into their social media use.
Gen Z is extremely in tune with 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 creating content for the platforms this generation is already visiting. This could include real estate agents hosting property tours on YouTube or tips and tricks on TikTok to reach this growing clientele. It’s also worth developing a robust SEO strategy to be seen at the top of that search page.
Sales tactics that worked for previous generations might not have the same effect on Gen Z. It’s noted that the younger generations can be highly skeptical due to their exposure to more information at their fingertips than any other generation. This is going to pose a learning curve for everyone in the real estate industry, so it’s essential to start understanding how Gen Z operates now.
It’s critical for real estate investors, professionals, brokerages and agents to look at the market through the eyes of Gen Z to help this younger generation succeed. After all, effectively analyzing this current climate will affect industry practices and, ultimately, will help agents build their business and client roster.