Next Home-Buying Demographic: Ready and Waiting (2024)

Generation Z already has its sights set on a sustainability-driven housing market.

Builders and manufacturers have spent a lot of time focusing on millennials—with good reason. Millennials have seized the top influencer position in the housing sector, spending more money buying and remodeling homes than any other generation.

However, Gen Zs are emerging. While their homebuying numbers are still fairly low, it’s important to watch this generation’s purchase drivers, buying patterns, behaviors, and preferences as they evolve in their careers, grow their household wealth, and expand their market influence. Soon, they will be buying homes in droves.

Portrait of a Generation

Pew Research Center defines Gen Z as persons born between 1997 and 2012. At 68.6 million strong, their collective spending power is about $360 billion. It’s a pittance compared to the $2.4 trillion spent by millennials (1981-1996), but the number of Gen Zs opening their wallets will grow exponentially over the next decade.

Two crippling recessions and a global pandemic have led Gen Zs to be debt averse and budget conscious. These individuals are considered to be discerning and sensible with respect to spending.

Generally speaking, they’ve also turned brand loyalty on its head. Many of them don’t want to wear fashionable, recognizable brands. In fact, they’re considered to be the “anti-brand” generation. While they rely heavily on social media for recommendations, they’re more likely to follow the advice of their peers rather than influencers.

Shifting Demographics and Psychographics

According to research firm GWI, the number of Gen Zs that are single, college students, and living with parents is decreasing, whereas the number of Gen Zs that are employed, are parents themselves, and are married is increasing.

Gen Zs’ values are quite different from older generations. As one example, there are currently more Gen Z individuals that are parents than are married, a dynamic that was once considered taboo by older generations such as Traditionalists (a.k.a. The Silent Generation, 1925-1945) and Baby Boomers (1946-1964).

The most-diverse generation in American history, equality is a guiding principle for Gen Zs. Technology has enabled these digital natives to connect to faraway cultures and global issues faster and more often than any generation before them. As a result, they tend to be more open-minded, liberal-leaning, and actively engaged in advocating for social justice and fair treatment for others. This is particularly important because Gen Zs will make up 17 percent of eligible voters in 2024 and 35 percent by 2036.

Climate Stance

According to Green Builder Media’s COGNITION Smart Data, Gen Zs are concerned about climate change, racism, gun violence, and pollution. Eighty-five percent of Gen Zs claim that they have greatly been affected by climate change, and they feel personally responsible for their impact on the environment. COGNITION data also shows that 64 percent of individuals under age 30 report that they feel guilty about their environmental footprint.

About 61 percent report feelings of sadness, anger, powerlessness, and helplessness when it comes to mitigating impacts of climate change, and more than half feel ignored when they try to express their climate anxiety to older generations.

These emotions have contributed to the larger sense of loneliness and isolation that has become pervasive among Gen Zs—to such an extent that a new branch of medicine called ecopsychology has emerged to help these individuals deal with their climate anxiety.

Indeed, the strain of mental health is felt acutely by this young generation. The chaos and confusion of everyday life is taking a toll, according to COGNITION data.

Work Outlook

Thirty-eight percent of Gen Zs have entered the workforce—a number that will continue to grow rapidly over the next several years (along with Gen Zs’ generational wealth).

Gen Zs have different workplace demands than their predecessors. Aspects of work that have been considered “nice-to-haves” by older generations are now expected, such as mental health days, remote working capabilities, and opportunities for personal learning and advancement.

Diversity and inclusion are of paramount importance to these burgeoning professionals. They seek career options that reflect their values and allow them to work among people from different backgrounds and cultures.

Gen Zs describe themselves as ambitious and career oriented. They are willing to work hard for companies that have missions and values that match their own. With that said, they’re more likely than older generations to leave a job that doesn’t meet their needs.

COGNITION data shows that individuals in this generation are looking for meaningful work that offers freedom and flexibility, allowing them time to pursue their hobbies and other interests.

Housing Expectations

The American Dream is very much alive within the Gen Z generation. About 80 percent have their sights set on homeownership—and they want to purchase homes quickly. According to Rocket Homes, nearly 45 percent want to own a home within five years, which means that tremendous transition in the housing sector is forthcoming.

Even though desire exists, there are major obstacles to Gen Zs buying homes—starting with affordability, which is particularly acute given that Gen Zs are in the early stages of building household wealth while home prices are at historic highs.

There is also a pricing expectation mismatch: Gen Zs anticipate that homes purchased now will cost somewhere around $225,000, but the national median average price is closer to $420,000, according to real estate brokerage firm Redfin.

To get into homes, Gen Zs are becoming crafty—those that are buying homes are doing so in less-expensive secondary and tertiary markets. Some are co-opting funds with friends and family for down payments, and others are getting creative with respect to living scenarios (e.g., with multiple couples living in one house).

Shifting Valuation Metric

When it comes to housing, Gen Zs are looking for a blend of attainability and sustainability. Affordability is certainly top of mind, but they also want the most-sustainable home possible because it lowers their total cost of homeownership. They’re willing to forgo fancy bells and whistles and even extra space in favor of upgrades that will lower monthly utility bills, keep them healthy, and enhance the resiliency of their homes.

One noticeable change in the mindset of younger generations—millennials and Gen Zs—is the willingness to look at long-term value of homeownership, as opposed to just upfront cost.

COGNITION data shows that Gen Zs are more willing than older generations to invest in sustainability upgrades to enhance energy efficiency, electrification, healthy home, water conservation, and resiliency if those upgrades will reduce ongoing costs over time.

While the desire to own a home is fairly consistent among all generations, Gen Zs are the most likely to consider moving due to climate change, are the most concerned about climate change impacting the value of their homes, and are experiencing the most difficulty getting insurance for their homes.

Gen Zs are also most likely to report that living in a net zero carbon home is important, and 100 percent of individuals in this generation claim that they would like to live in an all-electric home, according to COGNITION data.

Demand for Decarbonization

Gen Zs have little ambiguity when it comes to decarbonization and corporate sustainability.

Sixty-five percent believe that decarbonization is helpful to business, resulting in enhanced innovation, greater financial returns, and positive brand equity.

Among these younger individuals, there is a growing awareness of and demand for decarbonization strategies such as carbon sequestration (taking carbon out of the air and storing it), circularity, Life Cycle Assessments, and Environmental Product Declarations.

Beyond decarbonization, Gen Zs are demanding enhanced corporate sustainability strategies. Ninety-three percent believe that companies should take a stand on environmental issues and 78 percent prefer to purchase products from sustainable brands.

Ninety-three percent of Gen Zs have stopped purchasing a product because of a company’s sustainability practices. Ninety percent claim that they are more likely to do business with a company with strong environmental, social and governance (ESG) strategies compared to one that does not, and 72 percent believe that companies with strong ESG practices have higher quality products than those without.

A Pivotal Moment

The market is undeniably transforming as younger generations loudly voice their concerns about the environment and demand climate action.

More than 80 percent of Gen Zs believe that companies play an essential role in solving the climate emergency, and 85 percent want to be engaged with companies to develop better solutions.

Eighty-two percent say that the more socially and environmentally responsible a company is, the more motivated and loyal a Gen Z will be as an employee and as a customer.

With that said, although demand for sustainability is at an all-time high and growing, there are historically low levels of consumer trust. Seventy-eight percent of Gen Zs believe that it’s extremely important or very important for companies to have transparent and ethical business practices, but nearly 70 percent believe that companies greenwash very often or almost always.

Given these dynamics, it’s more important than ever for building professionals and manufacturers to craft authentic, data-supported sustainability strategies. Younger generations have made it clear that they want companies to be relatable, accountable, and transparent. They would rather hear an honest assessment about how a company has stumbled in its pursuit of climate goals than glossy, greenwashed (i.e., fake pro-environment) messaging with fuzzy details and hazy horizons.

This Special Report Was Made Possible with Support From:

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