Home Prices Have Given Gen Z 'Financial Whiplash' - Young Americans See Homeownership As Key To Building Wealth, But Rising Costs Are Keeping The American Dream Out Of Reach

For many young Americans, the idea of owning a home has always been a part of the American Dream. A recent survey by Arrived provides insights into Gen Z’s aspirations and challenges when it comes to homeownership.

Gen Z's Homeownership Dreams

According to the survey, a whopping 87% of Gen Z believes homeownership is key to building wealth. For 65% of them, owning a home is a personal milestone. Instead of seeing it as a status symbol (20.7%), a significant 65.5% view homeownership as a path toward financial security and stability. However, the dream remains just that for many. As of 2023, a mere 25.2% of adults under 25 are homeowners, according to U.S. Census Bureau data.

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High Cost of Entry

So, why the disparity between aspiration and reality? The answer: soaring costs. The biggest challenge cited by nearly 80% of Gen Z is the high home prices. It’s a stark reality given that since Gen Z’s oldest members became adults in 2014, home prices have surged by 58.7%. Adding to the strain, median home sales jumped by $52,667 between 2020 and 2021, a figure that shadows the median workers' earnings of $50,000. And while some pandemic-related market pressures have subsided, the median sales price of a home in the U.S. stood at a staggering $416,100 as of Q2 2023.

Mortgage Rates Add to the Woe

Further complicating matters for potential homeowners, the 30-year fixed mortgage rate has recently surged to 8% for the first time since 2000. This rate hike is yet another barrier for many in Gen Z, making monthly payments more expensive and home affordability even more challenging.

A Glimmer of Hope Through Fractional Ownership

But all is not lost. Fractional real estate ownership platforms like Arrived may offer Gen Z a silver lining. Cameron Wu, VP of Investments at Arrived, states, “Coming of age amid skyrocketing home prices and pandemic-era economic turbulence has given some of Gen Z financial whiplash.” He adds that platforms like Arrived are breaking down traditional barriers, enabling investment in real estate at any price point. With 58% of Arrived users born after 2000 starting their investment journey with as little as $100, there's renewed hope for Gen Z to dip their toes into the real estate market and build wealth.

In Q2 2023 alone, Arrived generated a commendable $790k in dividends for its investors, showcasing the platform’s potential to create real returns.

In Conclusion

The age-old aspiration of owning a home remains alive in the hearts of Gen Z. But with sky-high prices and challenging mortgage rates, the dream is elusive for many. Innovative platforms, however, are offering alternative paths to real estate investment, ensuring the American Dream is not just alive, but also accessible.

Note: The survey was conducted on June 1, 2023, with Gen Z being defined as those born in 1997 or later.

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