Gen Z no longer sees homeownership as an aspiration and is increasingly balking at mortgages to rent in luxury amenity-filled apartments instead.
Young Americans have taken to social media apps like TikTok in recent months, claiming it is nearly impossible to buy homes in the current economy, citing student loans, high mortgages, and low-salary job opportunities.
HOUSING AFFORDABILITY AT RECORD LOW, REPORT SAYS
The Wall Street Journal recently revealed that homes in Scranton are listed at a median price of $179,900. With a $150,000, 30-year mortgage at a 7% rate, the average monthly payment would sit near $1,000.
However, Americans who would typically purchase a home have opted for long-term rentals. Some have said they have no plans to ever buy a house.
Scranton project property manager Michael Basalyga said around 1,000 people would like to rent 32 luxury apartments built inside the Scranton Lace Factory’s converted living spaces, which run between $950 and $3,600 monthly.
Two-thirds of the units were pre-leased as of December.
BILLIONAIRE WEIGHS IN ON WHETHER YOUNG AMERICANS SHOULD BUY HOMES: RENTING IS ‘BUYING FLEXIBILITY’
“The Big Money Show” co-hosts Jackie DeAngelis and Brien Brenberg said the decision to buy or rent depends on the region, with DeAngelis noting that, in New York City, it is cheaper to have a mortgage so long as you have the cash for the down payment.
“If you actually did the math there and you say it’s about the down payment, in eight months, if you net out what your mortgage payment would be, you basically flushed your down payment money down the toilet. What is going on?” DeAngelis said.
The co-host surmised that a mentality of “I want it now,” coupled with chasing a nice living space free from the hassle of upkeep, are contributing to the decision not to grow value through a home nest egg.
Real estate investor GID, which owns or manages around 50,000 apartments in the U.S., said nearly a quarter of its renters earn over $200,000. Additionally, 64% of people in the U.S. are homeowners. This is well below the number of homeowners in China and Brazil, which sit at 89% and 72%, respectively.
“This is not a financial thing; this is a cultural thing,” Brenberg chimed in. “This is a move among younger generations where I want an experience, I want to travel. It feels good now—I get it. It feels good. But 30 years down the road, you’re going to be saying, ‘What happened to that money?’ Well, it went over to this guy.”
He admitted that it is very difficult to buy a home right now when considering the economy and the fact that those with a low mortgage rate do not want to sell.
“I’m not saying that young people have it easy. The problem is folks who could be in a position or who are in a position to buy a home and they’re saying, I don’t want to deal with the upkeep or the maintenance or the work—and its like if you don’t put sweat equity into something, you’re not going to get anything out of it.”
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