Study: Salt Lake is most popular metro for Gen Z
Even while millennials are working on purchasing their first homes, buyers from Generation Z — whose oldest members turn 24 this year — are bringing more competition to the local housing market.
In fact, Salt Lake City has the largest presence of buyers from Gen Z (those born after 1996). With about 8.5% of mortgage purchase requests coming from 18- to 23-year-olds, that’s the highest share in the country, according to a new LendingTree study that analyzed Gen Z buyers in the nation’s 50 largest metro areas.
In Salt Lake City, where the population tends to skew younger, the average age of a Gen Z homebuyer was 21.5. LendingTree said these buyers requested an average loan amount of $244,365 with an average down payment of $32,961.
“Gen Z buyers are young, but that’s not stopping some from getting into or trying to get into the housing market,” said Danielle Hale, chief economist of Realtor.com, in an article referencing the LendingTree report. “Areas where Gen Z buyers are finding success are generally affordable, which makes sense since younger buyers tend to have a harder time scraping together a down payment and also tend to have lower incomes.”
While Salt Lake City housing prices have grown in recent years, the metro is more affordable than many of the other metros in the region such as Denver, Los Angeles and San Francisco where loan amounts for Gen Z averaged $288,832, $392,572 and $575,723.
Even in Utah, however, Gen Z, faces tough competition in local housing markets where entry-level housing is particularly hard to come by. In Utah, the number of homes for sale under $300,000 is about half of what was available last year. The same is true in the $300,000-to-$500,000 range where housing inventory has also been cut in half, according to the Utah Association of Realtors.
With less than two months of inventory, first-time buyers should expect intense competition since there aren’t enough houses to go around.
If you are a Gen Z buyer, here are some tips for finding success in today’s housing market:
Find the right mortgage partner
Even though home prices are rising, low mortgage rates are a huge benefit right now. This week, Freddie Mac reported that the 30-year fixed-rate mortgage averaged 2.8%. That’s the lowest rate in the survey’s history, which dates back to 1971.
To get the best rate, make sure to shop around so you can compare pricing. LendingTree recommends getting quotes from at least three to five different lenders and checking your credit report to make sure there are no errors. LendingTree also suggests looking into first-time buyer programs that can help if you have a small down payment.
Finally, you’ll want to get pre-approved for a mortgage so you can show the seller that you’re a serious buyer who is likely to make it to closing.
Be ready to act quickly
Gone are the times of taking several days to decide whether to purchase a home. If a house you like comes on the market, you’ll want to schedule a showing immediately. If you want to buy the home, you’ll have to submit an offer right away.
Also leave room in your budget for making an offer over the asking price. In today’s market, many homes are being sold for thousands more than the list price as competition drives up values.
Make sure to talk to your Realtor about trends in your local market regarding how fast homes are selling and for how much. Your Realtor will also alert you when new properties are put up for sale so you can act quickly.
Make your offer competitive
While sellers often prefer all-cash offers, that’s probably not possible for most Gen Z buyers. But there are ways to make your offer more appealing. Some of these include having a short timeframe for conducting inspections, finalizing financing quickly and offering a sizable amount of earnest money.
Your Realtor can tell you more about what terms are customary and working well in your neighborhood and price range.
Buying an entry-level home is challenging in today’s low-inventory market. Make sure to work with a Realtor who can help you navigate the current environment. Find a Utah Realtor at MyRealtorStory.com.