Skip to main content

Gen Z should start saving now to afford a home by 2031

In 2031, the majority of Gen-Zers will hit their prime homebuying age at 30. But will they even be able to afford a home? Maybe, but only if they start saving now.

According to a realtor.com study released on Thursday, the average Gen-Zer will need to save $304 per month for the next 12 years to afford a 10 percent down payment and closing costs for a median-priced home ($386,310) by the time they’re 30. This assumes that home prices will only grow 3.2 percent year-over-year each year for the next decade.

If $304 per month sounds steep for an 18-year-old, it’s a bargain compared to what Gen-Zers on West Coast will have to stash away to achieve their home buying goals.

San Jose is the most expensive market, with an estimated monthly savings goal of $1,962 per month to afford a median-priced home of $2,496,370.

San Francisco is the second most expensive market with a monthly savings goal of $1,439 to afford a median-priced home of $1,831,140. Los Angeles ($979/mo.), Honolulu ($946/mo.), and Oxnard, Calif. ($877/mo.) round out the top five highest monthly savings goals with median home prices of at least $1,116,660.

Overall, Gen-Zers in the top 10 most expensive metros will need to need to save at least $948 per month to become a homeowner by the age of 30.

The latest trends in luxury — and how they impact real estate

How consumer trends in personal luxury goods open up new possibilities for luxury real estate READ MORE

Meanwhile, Gen-Zers living in the 10 most affordable metros where the median home price is estimated to reach $191,381 by 2031, will only need to save a $150 per month.

“Choosing to live in one of the U.S.’s larger and more expensive metros, especially on the West Coast, is going to make homeownership a difficult task, but that doesn’t mean that Gen Z should give up on their dreams,” said realtor.com chief economist Danielle Hale in a statement. “The most important thing they can do is start saving as much as possible early on and let compound interest do the heavy lifting for them.”

“They may also want to consider more affordable areas or different down payment amounts,” she added. “Some widely available programs allow down payments as low as 3 percent, but a lower down payment can mean higher ongoing monthly costs.”

Methodology

This analysis assumed an 18-year-old member of Generation Z started saving on his or her birthday, contributing the exact amount every month into a savings account with a fixed three percent annual return, compounded monthly. They will make their home purchase in 2031 on their 30th birthday, after making exactly 144 deposits over exactly 12 years. The calculated savings amount required includes money for a downpayment and typical closing costs of about 3.6 percent for first-time home buyers. Forecast median home price data comes from Moody’s Analytics (economy.com).

Email Marian McPherson.


Gen Z should start saving now to afford a home by 2031 curated from Inman

Comments

Post a Comment

Popular posts from this blog

Vacation rental company Vacasa buys Sterling Resorts

Vacation rental management tech startup  Vacasa  isn’t slowing down its ambitions to conquer the market: this week, it announced that it has purchased Sterling Resorts, a vacation management company on Florida’s Gulf Coast. Sterling has changed hands before: it was  bought by Pacifica Companies in 2015 and currently manages 450 homes. Now it will become a part of Vacasa’s effort to expand its presence in vacation destinations such as northern Florida, where Sterling is based. At the time of this latest purchase, Sterling’s home inventory was  down from 585 properties in 2015. Vacasa has raised more than $200 million since its launch ten years ago. Founder Eric Breon said he was motivated to start the company after struggling to find a satisfactory management solution for a cabin belonging to his wife’s family on the Washington coast. Now Vacasa seeks to provide rental property owners with “a seamless experience…through innovative technology and local staf...
Post a Comment
Read more

In An Era Of WeWork, Co-Working Space NeueHouse Sits Above The Fray

NeueHouse CEO Josh Wyatt Seuss Moments In today’s cluttered co-working landscape, it can be hard for companies to makes themselves heard over the din. Elevated co-working space  NeueHouse  wants to create an unparalleled experience for creatives through elevated programming and outstanding design. NeueHouse describes itself as “ a private cultural and collaborative space for prominent creatives, artists and entrepreneurs,” with current locations in Los Angeles and New York. In November, following an announcement of $30 million in funding , the company announced Josh Wyatt as its new CEO. Wyatt is a veteran of the hospitality industry, having co-founded Generator  in 2007, a chain of culture-focused hostels targeted at millennials, before moving on to Equinox to head the fitness brand’s hotel developments in New York City. Forbes interviewed Wyatt to talk about creativity, design, the gun threat incident at NeueHouse New York, and why he i...
Post a Comment
Read more

Could Ken Griffin's Penthouse Purchase Cost NYC Real Estate Buyers Millions?

'The Billionaire's Bunker' at 220 Central Park South is pictured on January 24, 2019, in New York - Hedge fund billionaire Ken Griffin has completed the purchase of a four-story penthouse in the building for $238 millionm- the most ever paid for a home in the US. The building is a residential skyscraper that is currently under construction. (Photo credit: TIMOTHY A. CLARY/AFP/Getty Images) Getty A 2014 bill that aims to impose an additional tax on part-time New York residents—dubbed the “pied-a-terre tax”—has risen from the dead, largely in thanks to the recent record-breaking Central Park penthouse purchase by billionaire Ken Griffin. Griffin, worth an estimated $11.7 billion and No. 45 on the Forbes 400 , reportedly bought the $238 million-dollar apartment “as a place to stay when he’s in town,” according to his representatives. The purchase drew widespread attention to the financial losses that part-time and foreign property owners can cause the city. Bec...
Post a Comment
Read more