Will I ever be able to buy a home?
If you are a member of Gen Z, you might have asked yourself this question over the past year. With inflation and rising home prices, the dream of homeownership may seem to be slipping further and further away. On top of that, the process itself can feel overwhelming. With the absolute overload of information available, it can be difficult to decipher where to even start.
While the current housing market presents challenges, buying a home as a young adult is still very much within reach, especially with the guidance of knowledgeable professionals. As you plan your future, consider these four tips.
1. Explore Your Options for a Down Payment
Let’s dispel a myth that might have scared you off from homeownership: you need a 20% down payment. The truth is, you probably won’t need to put 20% down. Unless specified by your mortgage type or lender, that 20% is more of a guideline. For most first-time homebuyers, a down payment on a house ranges from 7 to 8%– sometimes even as low as 3%. So be sure to work with a trusted mortgage professional to explore your options.
If a down payment is your #1 hurdle, you may have options to give your savings a boost. There are over 2,000 down payment assistance programs designed to make homeownership more achievable, especially if you are a first-time homeowner. Check out Down Payment Resource’s website to get a better idea of potential programs you may qualify for.
California has many programs and incentives for young homebuyers. For example, the California Dream For All Program offers first-time homebuyers down payment assistance. Each program has different eligibility requirements, so spending the time to research can save you a lot down the line.
2. Combine Incomes
Another thing some Gen Z buyers are doing is ditching their rented apartments and moving in with friends or family. This can help cut down your housing costs so you can build your savings a whole lot faster. As Bankrate explains:
“. . . many have opted to stop renting and live with family in order to boost their savings. Thirty percent of Gen Z homebuyers move directly from their family member’s home to a home of their own, according to NAR.”
Multi-generational homes are becoming more popular over the years. Living with your loved ones can offer lots of benefits, including sharing expenses and being able to afford a larger home with the combined incomes of multiple people. Many homes on the market offer specific amenities for living with multiple family members, like in-law suites, separate bed and bathrooms and multiple living spaces. Homes like these offer privacy with the affordability that comes with multiple incomes.
3. Cast a Broad Net for Your Search
When you’ve saved up enough and are ready to make the leap, having an agent by your side can be the boost you need. Since the supply of homes for sale is still low and affordability is tight, an experienced agent can provide strategies and avenues you may not have considered to open up your pool of options. While it’s easy to find homes on Zillow, an agent has the secret skills to help you land your dream home. Agents have the connections to a wide variety of people and resources and know the ins and outs of the market. In addition, an agent can help you find homes that fit your budget that you may have overlooked, like condos, townhomes, off-market homes and homes right outside your neighborhood net.
And if you consider smaller homes and condos or townhouses, you’ll give yourself even more ways to break into the market. As Colby Stout, Research Analyst at Bright MLS, explains:
“Being flexible on the types of home (e.g., a condo or townhome versus a single-family home) and exploring more affordable neighborhoods is important for first-time buyers.”
4. Take a Close Look at Your Wants and Needs
And lastly, an agent can help you differentiate between the must-have’s and nice-to-have’s. Remember, your first home doesn’t have to be your forever home. What’s most important is getting your foot in the door to start building equity. If you want to buy, you may find making some compromises is worth it.
An agent will help you prioritize your list of home features and find houses that can deliver on the top ones. And they’ll be able to explain how equity can benefit you in the long run and make it possible to move into that dream home down the line.
Bottom Line
While the road to homeownership for Gen Z might seem bumpy, it’s definitely not a dead end. By exploring down payment options, working with a real estate agent and prioritizing your needs, you’ll be on your way to achieving the dream of owning your own place. The most important thing to know is that you don’t have to do it alone. If you are ready to make homeownership a reality, then reach out to a Seven Gables agent today.
