Buying a detached house today is not easy. But things may not get any easier in the future for Generation Z, who will be aged 18 to 27 by 2024, especially for those with limited income and smaller savings funds.

According to a report published on InMyArea.com in late October, members of Generation Z who are homeowners have worked hard to become homeowners; They used tactics such as working a second job, moving to more affordable areas, and owning a home. purchasing foreclosed homes.

If you’ve seen the housing market lately, it’s no surprise that it’s hard for Gen Z to buy a home. In addition to sky-high home prices, mortgage interest rates remain high, averaging 6.88% on a 30-year fixed-rate mortgage as of October 29.According to Zillow data provided to Investopedia. This is almost 1 percentage point higher than before. The average we saw in September was 5.89% Before the Fed meeting.

If you’re a Gen Z hoping to buy a home, should you buy now or wait for interest rates to drop? This depends on your reasons for wanting a home, the strength of your finances and credit, and your belief that mortgage interest rates will fall in 2025.

The Median U.S. Home Costs $359,892, But the Median Annual Income Is Just $60,580

According to Zillow, the median home price in the U.S. is $359,892 as of September 2024, up 2.7% annually. Median weekly earnings for 120.8 million full-time wage and salaried workers in the U.S. were $1,165 in the third quarter of 2024, according to the U.S. Bureau of Labor Statistics (BLS). This multiplied by 52 weeks yields an average annual salary of approximately $60,580.

It is not easy to buy an average house with this annual salary. After a 20 percent down payment, the monthly principal and interest mortgage payment for a 30-year mortgage loan with an interest rate of 6.88 percent will be $1,892. If you only make $5,048 a month (before taxes and deductions), that will eat up a significant portion of your mortgage money. Buying a home is even more challenging for young adults in Generation Z because their average salaries can be even lower as they start their careers.

According to the BLS, workers ages 16 to 24 earned a median weekly wage of $746 in the third quarter of 2024; This meant approximately $38,792 per year. Even older Gen Zers (ages 25 to 27) fall short of earning the average U.S. wage; they only earn an average of $57,564 per year.

Despite below-average wages, nearly 25% of Gen Z adults own a home, according to InMyArea.com research. How did they reach this milestone?

Approximately one-third of Generation Z surveyed said they worked more than one job to buy a house, and 22% said they moved to a more affordable area.

This last strategy makes sense. Buyers can save a significant amount of money if they move to a new state. Zillow reports that the median home value in New Jersey as of September was $535,982. But in West Virginia, that median home value is much lower: $167,571. By expanding their search from a more expensive housing market like New Jersey to a more affordable housing market like West Virginia, Gen Zers can increase their home-buying budgets.

The research also found that 18% of Gen Z buyers received money from family members, 15% purchased a fixer-upper to reduce their upfront costs, and 11% purchased a property from a friend or family member. An additional 7% said they had purchased a foreclosed property (a higher rate than other age groups), while 8% said they were receiving government assistance or working in an assistance program for first-time homebuyers.

Despite the financial barriers to homeownership, 87% of Gen Zers told InMyArea.com they agree that homeownership is part of the American dream.

The research also found that young adults are willing to buy. While 32 percent of respondents ages 18 to 27 who are not yet homeowners said they plan to buy a home in the next five years, 38 percent said they plan to buy more than five years later. Only 30% said they had no plans to buy or were unsure when they would buy a home.

Buy Now or Wait?

So, if you’re a member of Generation Z, should you buy a home today or would it make more sense to wait for mortgage interest rates to drop?

Waiting for rates to drop could pay dividends for younger homebuyers, said Darren Tooley, senior loan officer at Cornerstone Financial in Southfield, Michigan.

Difficulty? No one can predict exactly what mortgage interest rates will be. This means younger buyers may be waiting a long time for rates to drop.

“It is widely predicted that mortgage interest rates will decline in the fourth quarter of this year and next year,” Tooley said. “I believe it will go down, too. But rates never go up or down in a straight line. There may be days” or weeks or months where rates go up, even in a market where rates are falling.”

But what if you want to buy a house now? Maybe your family is growing and you need more space. Maybe you transferred to a new city because of your job and want to put down roots. Is buying a house a bad decision these days when interest rates are high?

Not so, according to Tooley. Regardless of interest rates, the best time to buy a home is when it makes sense for you.

“I believe it is always a good time to buy a home,” Tooley said. “When you look at what home values ​​have done over the years, buying a home is one of the best and safest investments a person can make.”

You can also always apply refinancing your mortgage To lower your monthly payments and pay less interest over the life of your loan.

How We Track Mortgage Rates

The national and state averages referenced above are provided as is through the Zillow Mortgage API. loan-to-value (LTV) ratio 80% (i.e. at least 20% down payment) and the applicant’s credit score is in the range of 680-739. The resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications; these rates may vary from advertised teaser prices. © Zillow, Inc., 2024. Use subject to Zillow Terms of Use.