Future of Real Estate Looks Bright in the Eyes of This Generation

The age of the internet has opened up ways for people to dip their feet into real estate investment without having to leave your home. Today, digitally-managed portfolios make it easier and easier to get involved in the housing market and through other investment opportunities, such as real estate investment trusts (REITs), exchange-traded funds, and more. (1)

This focus on accessibility has appealed to potential investors of all types, especially those who may be interested in real estate investment before they can legally drink in a bar.

The future of real estate investing relies on younger market players staying interested, engaged, and actively moving money. Fortunately, the forecast is strong for the next generation of investors.

Real Estate Continues to Rise

Compared to other methods of investment, real estate continues to be the most lucrative investment opportunity among the public. A new survey from home renovation networking website Porch found that the U.S. housing market continues to be the perceived safest investment, with over 27 percent of Americans surveyed favoring real estate investment. Following close behind, other top investments ranked by the survey participants’ thoughts on their safety were savings accounts, gold, and U.S. bonds.

The survey found that Generation Z was more likely to put their earnings in a savings account over investing, the only age group to pull real estate from the top spot. Fortunately, Gen Z is poised to enter the housing market in stride. (2) As Generation Z (those born after 1995) emerges as a less cautious, more eager demographic, they are rapidly solidifying themselves as a force in the housing market with high activity: the number of Gen Z-ers who applied and were accepted for a mortgage increased 112 percent in one year (from Q2 of 2018 to Q2 of 2019). (3)

Over 100,000 Gen Zers and counting are homeowners, indicating that these younger buyers are attracted by a strong housing market and supported by their families who are pleased to see their children, grandchildren, or younger relatives taking the plunge into real estate. (4)

Younger Generations Showing More Optimism Toward Housing Market & New Trends

Most people in the Porch survey believe that the housing market will get stronger in the coming decade: Baby Boomers have the strongest outlook with over 80 percent feeling confident toward the future of the real estate market, followed by Generation Z (around 79 percent).

Younger generations are able to experience a wider range of real estate opportunities than in the past, leading to a favorable opinion toward this type of investment. (5) The Porch study went on to uncover the optimism of Gen Z, as nearly 79 percent of survey participants believed the housing market will rise in the next decade. The average 18- to 21-year-old was born at the same time the “dot-com” revolution was incepted and is part of the first generation raised after the tech boom. As a result, their relationship with technology is evolving, looking differently than other age groups. (6)

Despite the challenges that it can create, technology has opened up new opportunities for innovative options for businesses and concepts ready to be born that streamline the way we devote money to the real estate market.

Today, Gen Z-ers are able to get in on the ground floor of online real estate investment, a development in the accessibility and ease to enter the housing market. They are now exposed to many different options to consider, such as online investment opportunities and diverse types of investing (real estate EFTs, REITs, etc.), a combination of which allow for a diverse portfolio. (7)

The trends that Gen Z focuses on is also changing. While generations past were obsessed with “McMansion”-style homes (8), Gen Z are more ethically responsible than other age groups (9), making them more likely to hold contractors and landlords accountable for the moral and environmental standards of residential property and its management.

Gen Z: Taking the Housing Market by Storm

This newest generation doesn’t fear as much as millennials do. They are more detached from the impacts of the 2008 housing market meltdown and may feel more emboldened to enter into home ownership. (10) Younger generations are more inclined to prefer less expensive housing markets such as Ocala, Fla., or Nashville, Tenn., and less likely to desire to be “house-rich,” opting to place value in other areas. (11)

In order to bolster and support this rising group of future big-time market players, the industry must continue to evolve and focus development in the direction of the youth. For now, the future looks stronger than ever.

Sources

Younger investors, does this align with your mentality? Older investors, what real estate advice do you have for younger generations?

Let’s talk in the comment section below!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.