Gen Z Believes Winning the Lottery Is the Only Way To Afford a House, New Study Shows
If you’ve ever wondered about the odds of buying a lottery ticket that will make you rich, this might help: You have about a 1 in 42 million chance of winning a single-state lottery. Many younger Americans give themselves about the same chance of affording a new home in the current market.
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New research from Zillow found that 52% of Gen Zers and 57% of millennials who don’t currently own a home believe they’d need to win the lottery to afford one.
Since winning the lottery does not represent a sound financial plan, just about all younger Americans — 95% of Gen Zers and 94% of millennials — say they will need to make some serious life changes if they want to achieve the dream of home ownership.
The Zillow survey of 2,066 U.S. adults — conducted in March and released on April 19 — found that roughly 40% of millennials said they would need to get a second or third job to afford a home right now. About 28% of Gen Zers said they’d have to make a career change in to afford one.
That’s the case even though home prices in many U.S. markets have begun to ease from the record highs they hit last year. The current housing market is a classic case of good news/bad news.
The good news is, as of February 2023 the median sale price in the U.S. was down 1.2% from the previous year, according to Redfin. The bad news is, that median price was $386,721 — roughly 18% higher than the median sales price just three years earlier, according to Federal Reserve data.
The current housing affordability crisis is the “worst it’s been in at least 15 years,” Zillow reported. Overall home values are up 3% over the past year… and that’s coming off an already high base. During the peak of the COVID-19 pandemic, average home values rose by double digits.
Those home values already priced many would-be buyers out of the market, and now they are being squeezed further by rising mortgage rates.
“These findings highlight the gap between Gen Z and millennials’ dream of owning a home and their ability to actually make it happen,” Zillow home trends expert Amanda Pendleton said in a press release. “Mortgage rates have been on the rise since last year, sending monthly housing costs through the roof.”
The typical monthly mortgage payment is now $431 higher than a year ago, Pendleton added. When you combine rising rates with record-breaking home value appreciation, “it’s easy to understand why younger generations are wondering how they’ll ever be able to afford a home,” she said.
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Many Gen Zers would drastically change their lifestyles just to afford a down payment — including giving up social media. In the current price environment, you’d need to come up with about $67,000 just to make a 20% down payment on the typical U.S. home (not putting 20% down might mean having to pay for private mortgage insurance).
If you’re a first-time buyer looking to take the plunge this year, Zillow recommended starting out by coming up with a price you can afford. Using a mortgage calculator and affordability calculator can help you arrive at the right number.
After that, Zillow advised reading reviews of realtors in your area to find out which ones get the best scores. You should also get pre-approved for a mortgage so you are ready to hit the ground running if the perfect home suddenly comes on the market.
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This article originally appeared on GOBankingRates.com: Gen Z Believes Winning the Lottery Is the Only Way To Afford a House, New Study Shows