Owning a home has always been an essential part of the American dream–children have long grown up believing that they too can own a little piece of property surrounded by a white picket fence. And, while home ownership may have dwindled, the desire is still alive and well.
Approximately 65% of Americans currently own their own home (compared to 69% before the Great Recession), and homes have lost, on average, about 25% of their overall value. The Great Recession made us rethink our own financial goals–was home ownership really so important to us and our families? Instead, we shifted our focus toward things like normal retirement times and finding a satisfying job (that actually paid).
Why did we even want to be homeowners anyway?
Of course, this is a question asked out of desperation and fear–a home represents stability and financial freedom, and it always has. Even when the country struggled through a massive recession, we wanted to own homes. But we convinced ourselves that, perhaps, property ownership wasn’t quite right for us.
Enter Generation Z–born in or around the mid 90s, sometimes referred to as “post millennials”–we know, real original, isn’t it? This group is characterized by their connectedness, having lived life in a world already flush with internet, instant messages, texts, portable music devices, and smart phones. They’re digital natives and they’re more diverse than any group before them. And they’re redefining and renewing the American Dream.
While they’ve never seen an episode of Leave it to Beaver (or probably even heard of it), they know what they want–and it is real estate.
It’s back, baby!
But the desire to be a homeowner is back, and in a big way. Teens (who we’ll be referring to as Generation Z throughout the course of this article) are coveting homes like nobody’s business. 97% believe that they will be homeowners and 82% say that it is the most significant part of the American Dream–all of this from a Better Homes and Gardens Real Estate study.
The same study reports that over half of teens would be willing to give up social media for a year and complete double the amount of homework required if it meant that they, without question, would be able to purchase a home when they were older. Perhaps this says something about the impermanence of social media–but more importantly, the staying power of sound real estate investments.
A generational shift
Millennials, only a generation removed from Generation Z, have been making the most of recession times–developing a sharing economy that utilizes people and skills instead of money. Millennials actually prefer to rent, likely because they watched adults around them lose houses and jobs and financial security. For millennials, renting became a way of life, increasing by over one million. Home ownership decreased by 1.4 million.
But it isn’t so for those who witnessed the Great Recession at a younger age. Better Homes and Gardens CEO Sherry Chris believes it is because of the sense of family and togetherness brought on by tough economic times. A home meant stability, and children seldom know whether they’re family is renting or buying. In this way, a home became the symbol of a pleasant life–better than additional schooling (all of those student loans!), marriage (whose parents actually stayed together anyway?), or business ownership (talk about risky!).
An abundance of information
And, perhaps most importantly, more information is available to these youngsters. The push toward creating a financially literate society (and at a young age) means that younger people are more informed than ever. In fact, half of the young people surveyed said that they know more about money than they believe their parents did at the same age. This was attributed to family discussions (in the home) and discussions held at school.
Best of all, it appears that these young people are right–they do have more knowledge than their parents and siblings before them. Their financial awareness is such that they’ve got a pretty good idea about what they might spend (they said $274, 323)–incredibly close to the average home value of $273,500. They’re right on the money, which they also happen to be saving. Actually, three in five teens have some form of savings that they’re developing.
They’d like to own homes by the time they turn 28, which is a little sooner (but only three years) than the median age of homebuyers at their first purchase. But it sounds like they’re right to be optimistic–this is a group of kids that’s got it all together, a group of kids that will own the rental properties occupied by their predecessors, the millennials. They’ve got half the credit card debt of the millennials and they’re all around more financially literate.
So, sure–the Great Recession brought with it a housing bust that slowed down buying (great for those who own smart real estate in smart places), but things are beginning to balance out just a little bit now.
These wise kids have the right idea (only 17% believe in the long-term financial benefits of investing in stocks)–they’re going with real estate.
Why we’re singing their praises
Real estate is an important investment because it is so much less risky than it’s investment counterparts–the stock market is little more than a giant slot machine with little to no control. Real estate though is stable and smart. It allows for diversification even within one sector–invest in this city, and that one, and one over here–and you’ll always have renters.
While Generation Z might yearn for home ownership because it represents family and stability, they’re even smarter and more financially literate than they know. Real estate investments will be important for their early retirement–in fact, we wouldn’t be surprised to see them kicking back into a life of luxury retirement before their older counterparts.
A home represents stability in so many ways, and it seems that these kids understand that before they’re even understanding it. To that, we say–three cheers for real estate!