By Jonathan Arad, Co-founder and CEO
There's an interesting take on Gen Z vs. past first-time homebuyers by Vadim Verkhoglyad, VP, Head of Research at dv01, on National Mortgage News:
“Gen Z's strong standing across student debt, median income, wage prospect and current homeownership metrics position them favorably for future homeownership.“
It’s a bold new world for Gen Zs, no doubt. Less student debt, higher earning potential right out of college, and record-high homeownership rates for their age group. In simple words - they have more money and better prospects, putting them in the perfect position to buy a home and avoid foreclosure as time goes by.
In fact, dv01 states that the homeownership rate for Gen Zs is higher than that of any other age group (when they were at the same age range as Gen Zs are now). But it can also be attributed to the low interest rates we’ve seen during 2020-2022, and we need to consider whether the fact that 46% of Gen Zs’ debt is mortgage debt is indeed sustainable.
“As Gen Zs enter the housing market, MBS investors should have confidence in their ability to make timely mortgage payments and be less likely to default on their loans.”
Gen Zs’ resilience isn’t the only thing needed for MBS investors’ confidence in them and in the housing market. First, Gen Zs will need more homes to buy, even with the current rates, expected by many to remain above 6% for at least another year. Second, in order to revive the declining housing market we need to create innovative home-loan products that offer significantly lower monthly payments and reduce the risk for forbearance.
There’s a need for affordable finance solutions.