There is a widespread misconception that only the super-rich have the option of investing in real estate. Many people incorrectly assume that to be a real estate investor, you need to be advanced in age and have a large amount of liquid assets on hand. However, Generation Z, the youngest generation at the time may have the option to dip their toe into the pool of real estate investing. Due to current economic trends and the age of people who fall under the “Generation Z” heading, there is a new wave of real estate investors.
Who is Generation Z?
Generation Z is made up of people who were born between 1997 and 2012. In some instances, Generation Z is extended to 2013-2015. Generally speaking, people who range in age between 6 and 24 years of age are considered to be a part of Generation Z. If you’re not familiar with the term, you may have also heard this demographic referred to as the “iGeneration” and “Post Millennials.” Call them what you want, but it’s worth noting that there are currently roughly 68 million Americans who fall within those parameters. Based on numbers alone, it’s safe to assume that members of Generation Z will soon make up an ample percentage of real estate investors in the US.
The Role of Technology
It’s no secret that technology is playing a more instrumental role in virtually every industry and that real estate is no exception to the rule. Thanks to advances in modern technology, all sorts of investments can be made from your phone. It’s also possible to go through most of a real estate transaction from a phone or tablet. That certainly benefits members of Generation Z, as studies indicate that most of them have had their own cell phone since they were only 10 years old.
While this familiarity with technology may not equate to the money needed to become real estate investors, it does put Generation Z members in a better position to understand how to use technology to manage all of their finances.
They’re More Knowledgeable Than You Think
Many people view younger generations as irresponsible, careless and otherwise unable to make it on their own. It turns out that members of Generation Z may be more fiscally cautious as well as knowledgeable than their older counterparts. A recent study conducted by CreditDonkey surveyed 1,000 retail investors and found a large portion of Generation Z members consider themselves knowledgeable about investing. 53% of them say that they are confident in their understanding of how to invest. By comparison, only 44% of Baby Boomers consider themselves knowledgeable about investments.
And 57% of Generation Z adults started investing between the ages of 18 and 24 while only 14% of millennials say that they made their first investment before the age of 25. The numbers indicate that this youngest generation is actively engaged in learning how to manage their money and are willing to invest it when a good opportunity presents itself.
Age and Wealth Matter
There are logistical reasons for Generation Z adults to be more aggressive investors than their older counterparts in regard to investing. Thanks to their age, Generation Z has more time to rebuild their personal wealth in the event that an investment doesn’t work out. Generation Z also has a better chance at amassing future wealth. Members of this generation came of age during the Great Recession which decimated the real estate market. Generation Z was actually in a great position to take advantage of a booming economy until the Covid-19 affected the economy.
However, due to their entry into adulthood coming so recently, Generation Z adults are in a better position than millennials in regard to owning their own home. According to some studies, nearly 70% of millennials say that they cannot afford their own home. Somewhere between 30% and 35% of millennials say that they do not have access to the amount of wealth that they initially predicted. Generation Z is in a great position to experience success in the world of real estate investing.
Generation Z was more impacted by the Covid-19 pandemic than some other generations, but the fact remains that their youth puts them in a position to rebound and create long-term success, potentially through real estate investing.
Since these young adults are more informed than ever about investing and appear to be more cautious than the generations before them, it appears that Gen Z may be in a position to revolutionize the real estate investing industry.
Adam Luehrs is a writer during the day and a voracious reader at night. He focuses mostly on finance writing and has a passion for real estate, credit card deals, and investing.