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A difficult road for Gen Z homebuyers

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Statistically, Gen Z has owned homes at a higher percentage than millennials and Gen Xers due to lower mortgage rates during the height of the COVID-19 pandemic. Now, Gen Zers who did not purchased a home during the past three years may struggle to become first-time homeowners due to higher mortgage rates, inflation and other factors affecting the housing market. 

In a 2022 survey of Gen Zers between 19-25 years of age, Redfin found that 30% owned their homes compared to 28% of millennials and 27% of Gen Xers who were homeowners when they were the same age. 

While the statistics show an increase in homeownership, a variety of obstacles stand in the way of first-time Gen Z buyers. From this time last year, mortgage rates have risen over 4%, according to the study. Additionally, student loan payments have been reinstated, a limited supply of homes are for sale and people from older generations are in the market for their second and third homes.

In October 2023, Indianapolis homes sold for a median price of $230k, up 2.2% from October 2022. The housing market in Indianapolis is notably competitive, with many homes receiving at least two offers and selling after an average of 18 days on the market, according to Redfin. 

A July 2023 CNBC study ranked Indiana sixth in the most affordable states this year, but limited availability and quick purchase periods make it challenging to purchase one of these homes.

Gavin Reetz, 24, lives in an apartment, but looking ahead to the many long-term financial benefits of owning versus renting, he is ready to become a homeowner.  

“The money that goes towards rent is practically money you’re never going to see again, while money towards your mortgage is building equity for yourself with the goal of one day paying off that house and living for free,” Reetz said.

Reetz has dealt with some common stressors home buyers face as he has begun searching: Scheduling open houses and showings and calculating homebuying expenses can become overwhelming. He has also dealt with obstacles common to Indianapolis and Gen Zers. 

“With interest rates being so high, there’s just not much room for that first-time homebuyer to be competitive with the rest of the market. The biggest issue we’ve come across so far is investors, larger businesses, etc., putting in offers way over the listing price so that they can flip the house for a strong return on investment,” Reetz said.

Devin Williams, 25, recently bought a home for the same financial reasons as Reetz and to feel more comfortable in a home he owns.

“As I’ve gotten older, extra noise and dealing with other people’s living habits have gotten to me a little more than they used to, so I wanted to make a change,” Williams said.

Williams said the buying process was extensive, but it did not take long to find a home once he contacted a realtor, decided on a price point and determined he did not want a pre-existing home. From there, it was just about saving and finding the right location. While he recognizes many of the obstacles other Gen Zers are experiencing with the housing market, he says buying a home was still worth it.

“I would not say it is a bad time to buy if you can afford it. This is because rates will come down at some point, so mortgages will fall slightly, but it will be rough in the near future,” Williams said.

Contact Racial Justice Reporter Garrett Simms at 317-762-7847

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