How Gen Z Is Transforming The Way We Invest In Real Estate

Technologically dextrous rebels with a social cause – as Gen Z come of age, they’ve made a name for themselves questioning the legacy systems my generation has accepted as the norm.?

But, Zoomers do more than cast shade at their predecessors. They demand better. If something is broken, they will push to fix it.?

Their influence is causing seismic shifts across industries from luxury retail, to transportation. And with Gen Z’s purchasing power expected to grow 400% to $33 trillion over the next decade, it’s no wonder marketing, political and entertainment sectors alike are paying attention to what they like.

Now Gen Z is shifting their focus to industries that have locked them out: like real estate investing.?

In the U.S., commercial real estate is solid, rebounding quickly to pre-pandemic levels. Meanwhile, commercial real estate in Canada is on track to post a record of nearly $50 billion in investments this year. But while Zoomers want to own a home, like Millennials before them, the cost of entry is too high. The average price of a home in the USA soared by an unprecedented 24%.?

Here’s how Gen Z is finding a way in and revolutionizing real estate investing in the process.?

They’re redefining home ownership

Zoomers have watched Millennials struggle with a wage gap that’s made home buying in its traditional sense, unattainable. Compared to Baby Boomers at the same age, Millennials own eight times less American real estate and spend 39% more on a first home. Faced with the same challenges, Gen Z is marking their own fate by redefining what homeownership means.

Instead of purchasing a home to live in, they're leveraging crowdfunding and the sharing economy to take ownership in houses, buildings, even commercial properties for as little as $1. Simply put, they’ve realized being a homeowner doesn't mean they have to live where they’ve invested. In fact, there are advantages to not going all in on one property.?

In traditional home ownership, the process is stressful, drawn out and brings heaps of responsibilities: mortgage payments, property tax, maintenance and insurance.?

By not living where they invest, Gen Z is realizing the benefits of a lucrative long-term investment without giving up the freedoms they enjoy now: tickets to an unforgettable concert, a closet full of luxe yet sustainable fashion, dinners out, travel and the latest gaming system. They get the capital appreciation while someone else deals with landlord responsibilities.?

They’re prioritizing transparency and community?

Realizing real estate investing is no longer reserved for the wealthy elite, Zoomers are bringing the market out from behind locked doors and into the community.?

The pandemic helped spark new interest in investing. Confined to their homes and concerned about their future, young investors took to their devices to educate themselves and make their money work for them. In the UK, one in six 18-23 year olds invested for the first time during the pandemic, and more than half of them took their investment advice from social media.?

Instead of looking to legacy financial institutions for help, Zoomers are building online communities on Reddit and Discord and using their influence to educate their peers on what they learn on TikTok. These online communities allow Gen Z to ask questions in a way they’re comfortable with, lurk and engage on their own terms.?

Ever-mindful of the power of tech to disrupt how things have traditionally been done, they are using the Internet to democratize investing and bring their peers into the fold. Transparency is the priority and authority takes a backseat to community.?

Under Gen Z’s influence, exclusivity is out; inclusive investing is in.

They’re sharing the wealth?

Gen Z wants everything from their employers to their purchases to reflect their values –?and real estate investments are no different. Instead of thinking of how their purchases can benefit themselves, they’re looking at how they can benefit others and the world around them.?

I saw this recently when a community of young investors teamed up to invest in a 105-unit rental in Mission, British Columbia. Designed and built for the purpose of long-term rental housing, it will also include 11 affordable housing units. Consumption is being redefined as an act of activism, changing the world through purchase power – and that’s a good thing.?

When people are shut out from an entire market, they get the message that the future they dreamed of isn’t possible. Feeling like you can never get ahead takes a toll on mental well-being. But it can also create broader societal disillusionment. In fact, in the UK, nearly 80% of young Britons blame capitalism for the housing crisis. When you have no skin in the game, it's only rational not to be fully vested in following politics.

I’ve heard from people who have detached themselves from local politics, quit watching the news, even become despondent, no longer exercising their civic right to vote. But that’s changing with Gen Z. Indeed, 66% believe communities are created by causes, not by things like economic background or level of education. It’s not an option to keep up business as usual.?

Let’s face it, the path to property ownership was due for a makeover. For too long, entire populations have been left out of real estate investment. But ready or not, thanks to the cultural shift demanded by Gen Z, that’s changing. If we follow their lead, we can look towards a future where ownership is possible for anyone who feels compelled to invest in their community.