Gen Zers say they’re putting off buying a house indefinitely, and nearly a quarter say home ownership is “unattainable.”
GREENWOOD VILLAGE, Colo., Oct. 5, 2022 /PRNewswire/ — Americans say the rising cost of real estate is more worrisome than a recession, according to a new survey by Personal Capital conducted in partnership with Morning Consult.* With home prices still on the rise, up 14% YOY in August, 1 in 4 people say they’ve decided to delay purchasing a home indefinitely, with Gen Z the most likely generation to say they’ve put home ownership plans on ice.
More than 75% of Americans predict a recession within two years, yet interest rates were the top homebuying concern among survey respondents. At 5.89%, interest rates are more than double what they were a year ago, and at their highest rate since 2008. The result is mortgage payments several hundred dollars more than for the same loans taken out a year ago.
“There are few ways to circumvent the impact of higher interest rates on your mortgage bill, but one option is to put down an even bigger down payment than you were planning,” according to JJ Lester, Certified Financial Planner and a Real Estate Specialist at Personal Capital. “As part of this process, consider your other investments and cash reserves. There are several strategies to build long-term wealth. If buying a home means you won’t be able to build your emergency savings or will have to pause contributions to your 401(K), you might want to consider putting your plans on hold.”
Despite Millennials’ famous bad timing with the market – graduating during the 2008 financial crisis and experiencing a once-in-a-century pandemic just when they’ve found their foot in their careers – many remain confident in their ability to buy a home. Only 18% of Millennials said that buying a home is unattainable, compared to 22% of Gen Z (22%). Whether it’s because they’ve already settled into their dream home or they’ve now set their sights on other financial goals, Gen Xers and Boomers (those aged 45-65+) were the most likely to say they weren’t interested in buying a home at all (26% of Gen Xers and 44% of Boomers responded this way).
But the dream of homeownership is still alive, particularly as a pathway to prosperity. Three in four Americans see homeownership as part of building wealth. However it no longer seems to be viewed as the ultimate goal in financial prosperity, as 43% of respondents said it was “one of several ways to build wealth.” While they still value homeownership, Americans appear to be seeking alternative ways to grow their net worth as rising home prices increasingly put buying a home out of reach.
For those who don’t believe home ownership is an important part of building wealth, here’s where they’re putting their money instead:
- Retirement account such as a 401(K) or Roth IRA: 42%
- High-yield savings account 36%
- Individual stocks: 25%
- Mutual funds: 20%
- Bonds: 12%
- Cryptocurrency: 11%
- Exchange-traded funds: 7%
“The past few months have shown how quickly the housing market can shift,” says Lester. “That’s why the decision to purchase real estate often relies more on your lifestyle goals than trying to time the market.”
The free Personal Capital dashboard is a wealth management tool that offers users a complete view of their finances – including where real estate might fit in. The tool also allows users to link their mortgage account and track their home’s market value according to Zillow. Visit www.personalcapital.com to learn more.
*Methodology
This poll was conducted September 1-6, 2022 among a national sample of 2210 US adults. The interviews were conducted online, and the data are weighted to approximate a target sample of adults based on gender, educational attainment, age, race, and region. Results from the full survey have a margin of error of plus or minus 2 percentage points.
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Personal Capital is a remote-delivery, industry-leading digital wealth management company that helps people transform their financial lives through technology and advisory services. The company’s state-of-the-art tools and technology provides consumers with a holistic financial picture and are used by over 2.9 million people to track $1.2 trillion in account assets (as of 4/30/21). Its wealth management advisors provide expert guidance, and customized strategies, based on a personal understanding of an investor’s financial picture and goals. For more information, please visit www.personalcapital.com or connect on Facebook, Twitter or LinkedIn.
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