America’s youngest adults are hoping for a cataclysmic event in the housing market that would cause home values to plummet. Find out why.
Study Shows Gen Z Hope for Housing Crash
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Last month, Lending Tree released a study that revealed that more than half of Generation Z are actively hoping for a significant downturn in the housing market. This comes as many older members of Gen Z have been priced out of the chance to purchase a home.
Home Prices Still Too High for Young People to Buy
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With home prices still out of reach for many, and mortgage interest rates hovering around seven percent, homeownership remains a pipe dream for many rising adults. They are also facing historically high rents in most areas of the country.
Housing Not the Only Concern, Expert Says
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In the report from Lending Tree, a representative from the company warned that a crash would affect more than just the housing market.
“I Can Understand Why Some Might Wish for a Housing Crash”
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“Right now, home prices are high, as are mortgage rates,” said Jacob Channel with Lending Tree. “With that in mind, I can understand why some might wish for a housing crash that brings lower prices.”
“It Would Bring Down the Rest of the Economy”
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“Unfortunately, if the national housing market were to crash, odds are that it would bring down the rest of the economy with it,” Channel continued.
Crash Unlikely Any Time Soon
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As experts in the field expect a stabilization of home prices and mortgage rates, many would-be homeowners wonder if a housing crash is inevitable, but it doesn’t look like it.
Millennials Wouldn’t Mind a Housing Crash, Either
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Gen Z isn’t the only group who wishes for the market to go under, though. Millennials, born between 1980 and 1996, seem to feel similarly to their younger counterparts.
35% of Americans Welcome Housing Crash
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Out of everyone surveyed, 35% said they would welcome a housing crash.
Past Study Showed Similar Feelings
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In 2022, Consumer Affairs published a study that yielded similar results, but in that study, 84% of Gen Z members surveyed hoped to see the market crash so they could afford to buy a home.
“Gen Zers Have the Least Saved for a Home”
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“Gen Z was the generation most likely to want a housing crash or correction so they could buy a home,” the report read. “Despite their hopes for a cooler market, Gen Zers have the least saved for a home.”
Inflation and Other Factors
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Why Gen Z has less money saved than any other generation could have something to do with the fact that they’ve aged into a difficult job market and sky-high living costs.
Cost of Living Makes Home Buying out of Reach
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Inflation rates have continued to rise while wages have failed to keep up with the cost of living in most American cities, and housing is less affordable than it has been in thirty years.
Inventory of Great Concern
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Interest rates and inflation have contributed to the skyrocketing costs of housing, but inventory remains one of the most significant hurdles.
The Price of Selling
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Low inventory happens for a number of reasons, chief among them the concern of affording a new home after selling a current one. People are also hesitant to give up the low mortgage rates they obtained when purchasing their homes in earlier years.
Some Ambitious Buyers Jump Back Onto the Scene
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That doesn’t mean some people aren’t diving back into the housing game now that prices have started to level out a bit.
Fewer People Waiting to Buy
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A survey from December showed that 62% of people said they wanted to see lower rates and home prices before they would be ready to purchase a home, and that figure is down from the midyear report of 85%.
What It Means to “Date the Rate”
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When mortgage rates are the largest concern for potential homebuyers, some experts believe in the concept of “dating the rate.” This refers to the idea that purchasing a home is a good investment even if interest rates are high, because the opportunity to refinance would come when rates fall.
“The Best Time to Buy Is When You’re Ready”
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“When it comes down to it, if buying a home is your goal and within your budget, the best time to buy is when you’re ready financially and you can find a home that fits your needs,” said head of consumer lending Matt Vernon in a statement released by Bank of America.
“There Are Clear Benefits to Purchasing a Home”
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“Even in the current interest rate environment, there are clear benefits to purchasing a home and beginning to build equity,” the statement continued.
The post Gen Z Pins Hope on Housing Market Crash for Affordable Homes first appeared on Pulse365.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.