Source: Insider —
Soli Cayetano finally had some time on her hands. The soon-to-be college graduate was stuck at home in the spring of 2020 and coasting through Zoom classes. Normally her part-time job leasing out office space kept her busy, but those services weren’t exactly in high demand at the time.
Cayetano, a self-described “hustler” who got her first job at 14, wasn’t one to stay idle. So after doing a bit of research and dipping into her savings, she flew from her home in the San Francisco Bay Area to Cincinnati to check out her big pandemic purchase: a two-bedroom house for which she paid just under $100,000. She was 22.
Cayetano had no plans to move to Ohio. Instead, she did what many real-estate investors do: She touched up the property and threw it on the rental market. After the home sat vacant for a couple of months, she fired her property manager and found a tenant by listing the property on Zillow and paying an investor friend in the area to do showings. Almost three years later, she not only manages that first property from her home in California but has built a mini real-estate empire of 36 units.
While many aspects of Cayetano’s foray into real-estate investing followed a well-worn path, her methods — and mindset — were decidedly of a new generation. She’s a member of Gen Z, the cohort born between 1997 and 2012. Unlike millennials before them, Gen Zers have grown up during a boom in home prices. As the older members of the generation embark on careers, a growing number are turning to the world of real-estate investing as an escape from the shackles of a desk. With technology and know-how that previous generations could have only dreamed of at their age, these Gen Zers are eager to get in on the real-estate action, and they’re poised to reshape the housing market as they claim their slice of the pie.
The new American dream
There’s a lot we still don’t know about Gen Z when it comes to the housing market, since a large chunk of the generation is just starting out on their own. But compared with millennials, who came of age in the shadow of the Great Recession and the housing bust, Gen Zers have been lucky: They largely managed to avoid economic calamity when the pandemic struck, thanks to government support and a strong job market. They also don’t bear the same battle scars from the housing market’s collapse in 2008, since the oldest among them were just 11 or 12 when the wave of foreclosures began. The pandemic, which threw a wrench in many Gen Zers’ postgrad plans, has also nudged more members of the generation toward alternative investments like real estate.
That could help explain why Gen Zers have a rosier view of real-estate investing than their immediate predecessors. In a 2020 survey by Gen Z Planet, a research and advisory firm, 87% of Gen Z respondents said they wanted to own a home in the future, while just 63% of millennial respondents said the same. The survey suggested that 68% of Gen Zers viewed homeownership as a way to build wealth, compared with 60% of millennials. Another 2021 survey by online lender RocketMortgage found that 86% of Gen Z respondents want to buy a home, and 45% wanted to buy within the next 5 years.
“We learned a lot from that recession” in 2008, Cayetano told me. “One of the things we learned is that real-estate values bounce back and keep going up.”
Gen Zers haven’t had the chance to do much with that knowledge yet, mostly owing to their youth. But the ranks of Gen Z homeowners will almost certainly grow in the coming years as they scale corporate ladders and amass savings. Millennials accounted for about 43% of all home purchases in the US in 2021, according to the National Association of Realtors. Gen Z made up just 2% of homebuyers that year, though the NAR counted only members of the generation who were born in 1999 or later. A separate study by LendingTree, which looked at Gen Zers who were born in 1997 or later and who used LendingTree’s platform, found that these Gen Zers accounted for an average of 10% of homebuyers in the 50 largest US metros in 2021, up from nearly 6% in 2020.
We learned a lot from that recession. One of the things we learned is that real-estate values bounce back and keep going up.