What you should know when working with Generation Z
For a long time, Millennials have stolen the spotlight when it comes to consumerism. Their purchase behavior, finances, and buying preferences have been sliced and diced every which way in an attempt to understand future buying trends. However, as Generation Z grows older and their collective purchase power increases, the spotlight is quickly shifting to them.
Generation Z, those born later than 1996, make up about 24.3 percent of the U.S. population.
The Washington Post recently estimated this segment of the population will have around $3 trillion in purchasing power by 2020. This huge number, and how it impacts home-buying behavior, is exactly the reason why it’s important for you to understand what motivates a Gen Z buyer. They have different lifestyles, financial goals, and upbringings. Having a basic understanding of these will help you better meet their needs.
A recent study by PropertyShark found that, while they are close in age to Millennials, there are a couple of key differences that set the two generations apart.
One of the most notable differences the study reported is that 60 percent of Gen Z-ers prefer suburban living. Various factors that have shaped their lives, such as seeing their parents go through recessions, have shaped their motivation for living in secure communities and moving into suburban areas as first-time buyers. This is a substantial difference from Millennials, who are more likely to live in urban areas once they’re in a position to buy and then move to suburban neighborhoods later in life.
Additionally, the study found that Gen-Zers are more likely to choose the location they live in based on entertainment proximity and technological offerings. This generation has been surrounded by technology their entire lives, and it’s deeply ingrained in their way of life. Millennials, however, often instead choose their ZIP code based on where their friends live and environmental factors.
Another difference the report focused on is the likelihood of buying and the barriers to do so. As many Gen Z-ers have just begun thinking about purchasing a home, most don’t have much saved toward a down payment. The study found 93 percent have been saving for less than five years and 20 percent of respondents haven’t saved at all. There are also barriers in place that haven’t impacted other generations, such as huge amounts of student debt. These factors will undoubtedly impact buying behavior.
As many Gen Z-ers are just beginning to enter the market or think about entering, we still have much to learn about this part of the population and how to best serve them. Understanding their specific financial goals, hurdles, and motivations will give you the edge needed to ensure these buyers you’re the lender that understands them and the one they want to work with.