Years ago, numerous media reports said millennials would always be the sharing generation and remain renters forever. Whoops. That prediction didn't pan out at all. In a recent survey, 86% of millennials said they believe owning a home is part of the American dream, and 71% of the next cohort of potential buyers, Gen Zers, agreed.
While affordability challenges may hold back some prospective buyers, educating them about financing opportunities, especially down payment assistance programs and the rules that allow a down payment as low as zero or 3%, can help. National Mortgage Professional reported that 80% of young potential homebuyers are stressed about affording a down payment.
Millennials and Gen Zers want to own homes
The dream of homeownership is alive and well among millennials and Gen Zers, providing a pipeline of prospective buyers for the next few decades and beyond.
Not only do these demographic groups want to own homes, but they're also optimistic: About two-thirds of recently surveyed Gen Zers and millennials said it's realistic to think they can buy a home within the next five years. In another survey, 79% of Gen Zers and millennials expressed optimism that their lives would be at least as good as their parents.
Financial stability and wealth building
Recent surveys and analyses of millennials and Gen Zers find financial security and opportunity are as important as homeownership. And, unlike their occasional media portrayal, these two generations have a strong work ethic, with 81% believing that if they work hard, they'll succeed and 71% believing hard work will allow them to move up the economic ladder.
Over time, real estate has proven to be the most reliable and time-tested investment — and the only one you can live in. Remember that renters' interest rates are 100% because none of their monthly payment goes to building equity.
The wealth gap between homeowners and renters is staggering. According to the federal government, the median net worth of all U.S. homeowners was $255,000, which is 40 times the median net worth of renters at $6,300.
Tax benefits for homeowners
While building equity through paying down a mortgage is one of the most important advantages of buying rather than renting, homeowners in the United States can also benefit from various tax incentives, such as mortgage interest deductions and property tax deductions. In addition, local, state, and federal tax incentives can sometimes be used to make green home improvements that add to home values.
These advantages make homeownership more attractive and financially rewarding, particularly when compared to renting, since renters have zero tax benefits.
Being part of a community
As millennials and eventually Gen Zers get older, have babies, and find partners, the desire to live in a community rather than in the siloed experience of renting becomes more attractive. Owning a home can foster a sense of community and belonging, as homeowners often become more involved in their neighborhoods. This engagement aligns with the American Dream's ideals of pursuing a fulfilling life and contributing to the greater good.
In a 2021 survey of homeowners and prospective homebuyers in the Gen Z and millennial generations, 51% said they value community and friendly neighbors when deciding whether or not to buy a new home.
Pride of ownership
Owning a home comes with a sense of pride and accomplishment that is difficult to replicate through renting. Numerous studies demonstrate the positive effects owning a home has on people — including the ability to control their own environment, feel they are building a financial safety net, and experience the stability of staying in their neighborhood for years and even decades. This emotional connection to homeownership remains a vital aspect of the American Dream for many individuals and families.
Despite past news reports that the American Dream of homeownership is dying or dead, it is very much alive.
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