Hey, Gen Z, Better Start Saving for a Home Now!
February 1, 2019
Nearly 80 percent of Generation Z members say they they want to own a home before age 30, but a new study shows they will need to do plenty of saving beforehand. Indeed, Generation Z will need to save $304 a month for the next 12 years to buy a home with a 10 percent down payment plus closing costs on a median-priced home by the age of 30, according to a new study released this week by realtor.com®.
The median-priced home in the U.S. is projected to cost $386,310 by 2031—the year when current 18-year-olds in Gen Z will turn 30. (For comparison, the median-priced home in 2019 is expected to cost $265,000.) Over the next 12 years, the median price of a home is expected to increase 46 percent, assuming prices grow at a modest 3.2 percent per year over the next 12 years, according to realtor.com®’s analysis.
Gen Zers will need to save even more depending on the location they intend to call home, too. For example, to buy a home in San Jose, Calif., they’ll need to start saving $1,962 per month for the next 12 years, and in San Francisco, they’ll need to save $1,439.
"Choosing to live in one of the U.S.'s larger and more expensive metros, especially on the West Coast, is going to make homeownership a difficult task, but that doesn't mean that Gen Z should give up on their dreams," says Danielle Hale, realtor.com®'s chief economist. "The most important thing they can do is start saving as much as possible early on and let compound interest do the heavy lifting for them. They may also want to consider more affordable areas or different down payment amounts. Some widely available programs allow down payments as low as 3 percent, but a lower down payment can mean higher ongoing monthly costs.”
The Midwest and South may offer the most opportunities for buying a home compared to pricier West Coast locales. For example, researchers found Youngstown, Ohio, is the most affordable metro; Gen Zers would need to save $108 per month for the next 12 years to buy at the age of 30 there. Youngstown was followed by McAllen, Texas ($111 per month); Toledo, Ohio ($141 per month); Wichita, Kan. ($154 per month); and Little Rock, Ark. ($156 per month).
“Generation Z Needs to Start Saving $304 a Month to Buy a Home at Age 30,” realtor.com(R) (Jan. 31, 2019)
Updated: October 23, 2020