More housing supply, lower student debt burdens a factor
Millennials have been staking their claim on the housing industry. But Gen Zers? Experts say they’ll play an even bigger role, notching a higher homeownership rate than Millennials by 2035.
Homeownership rate to rise with Gen Zers
According to a recent survey of economists from Zillow, 45 percent of experts say Gen Z homeownership will be higher than that of Millennials (at comparable ages) by the time it all shakes out.
Why the uptick? There are a number of reasons, according to the economists surveyed. Some say housing supply will expand, others say they’ll be a growing desire among Gen Zers to own rather than rent.
Some also say student loan debt will decrease and less-costly housing markets will become more appealing.
Here’s how Skylar Olsen, Zillow’s director of economic research, explains it: “In 2020, the oldest Millennials will begin turning 40, capping a turbulent decade that presented any number of homebuying difficulties for them at the same time as they aged into their prime homebuying years and severely denting the homeownership rate among 35-to-44 year-olds. By 2035, when the younger Gen Z begins reaching the same age, experts said they largely expect conditions to be more favorable and for the homeownership rate among 35- to-44-year-olds to be higher than it is today.”
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Where will home prices go?
Though many of the economists surveyed by Zillow expect housing to be more accessible in the long-term, in the short-term, most say home prices will rise.
Overall, the experts say prices will jump 2.8 percent next year (down from an expected 3.6 percent this year). By 2021, prices will rise just 2.3 percent before spiking upward in 2022.
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Those are just averages, though. Some individual experts actually predict a drop of up to 3 percent next year, while others predict a 7.4 percent uptick.
“This spread in long-term expectations between panel optimists and pessimists is very near the highest level recorded in the 10-plus year history of this survey,” Olsen said.
Get today’s mortgage rates
Gen Zers may be looking at prime homebuying conditions down the road, but with low interest rates and stabilizing home prices, now could be a good time, too.
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