Millennials and Gen Zers Flood Housing Market, But Expert Warns of Ownership Risks

Millennials and Gen Zers Flock to Housing Market, But Expert Warns of Ownership Pitfalls The housing market is experiencing a surge in demand from millennials and Gen Zers, with many eager to break into homeownership despite high home prices and mortgage rates. However, one real estate expert cautions that owning a home may not be the best decision for everyone. According to recent research from ServiceLink, a leading mortgage tech firm, 71% of Gen Z respondents (born between 1997 and 2012) believe that buying a home is a key milestone in life. Meanwhile, 62% of millennials (born between 1981 and 1996) are also eager to enter the housing market. However, Amir Korangy, founder, chairman, and publisher of real estate news site The Real Deal, warns that owning a home may not be as attractive as it seems. "If your whole thinking is like, 'Oh, I should buy a home because I'm at that age, and I should buy a home,' I don't think that's a good reason to own a home," Korangy told Fortune. Korangy, who is also an associate professor at Columbia University's School of Architecture and a senior fellow and adjunct professor at NYU's Schack Institute of Real Estate, notes that the current housing market is characterized by high prices, rising mortgage rates, and increasing competition. "The math just doesn't add up for many people," he says. In fact, data from Zillow shows that the median home value in the United States has increased by 14% over the past year, while mortgage rates have risen to their highest level since 2008. This has led to a decrease in affordability, with many potential buyers struggling to secure financing or compete with all-cash offers. Korangy argues that owning a home is not always the best financial decision, particularly for those who may not be able to afford the costs associated with homeownership, such as maintenance, property taxes, and insurance. "You could rent a much nicer space for yourself than you could own one," he notes. While some experts argue that owning a home can provide long-term benefits, such as building equity and tax deductions, Korangy warns that these advantages may not outweigh the costs in today's market. "Not everyone should be an owner," he says. The implications of this trend are significant for stakeholders across the housing industry, including lenders, builders, and investors. As demand for housing continues to outstrip supply, prices are likely to remain high, making it increasingly difficult for first-time buyers to enter the market. However, Korangy notes that there may be opportunities for innovation in the housing market, such as the development of more affordable housing options or alternative forms of ownership. "We need to think creatively about how we can make homeownership more accessible and affordable," he says. As the housing market continues to evolve, it remains to be seen whether millennials and Gen Zers will be able to achieve their dream of homeownership. While some may choose to rent instead, Korangy's warning serves as a reminder that owning a home is not always the best decision – at least, not in today's market. Key Statistics: 71% of Gen Z respondents believe buying a home is a key milestone in life (ServiceLink research) 62% of millennials are eager to enter the housing market (ServiceLink research) Median home value in the United States has increased by 14% over the past year (Zillow data) Mortgage rates have risen to their highest level since 2008 Affordability has decreased, with many potential buyers struggling to secure financing or compete with all-cash offers Stakeholder Impact: Lenders may see increased competition for business as demand for housing remains high Builders and investors may face challenges in meeting the demand for affordable housing options Renters may benefit from increased competition and potentially lower prices Future Outlook: As the housing market continues to evolve, it is likely that we will see new innovations and solutions emerge. Korangy's warning serves as a reminder that owning a home is not always the best decision – at least, not in today's market. As stakeholders across the industry work to meet the demands of millennials and Gen Zers, they would do well to consider Korangy's advice: "Not everyone should be an owner." *Financial data compiled from Fortune reporting.*