Unlocking Homeownership For Gen Z: How They Can Acquire Real Estate Amid Today’s Market Challenges

In the fluctuating Canadian real estate landscape, Generation Z, the next generation of first-time homebuyers, are aspiring to homeownership. However, they face the daunting challenges of soaring rental costs, housing scarcity and rising inflation.

Despite these obstacles, Gen Z shows resilience and adaptability, embracing frugality and seeking innovative strategies to achieve home ownership goals. 

A distinct perspective and attitude towards finance and homeownership

Born into a digital era, Gen Z brings a distinctive perspective and attitude toward finance and homeownership. Growing up in a time of economic uncertainties, they prioritize financial sensibility and have a conservative approach to money management. According to 2023 CFA Institute and Financial Industry Regulatory Authority research, 74 per cent of Canadian Gen Zs own at least one investment. 

This conservative attitude towards money is driving the group to be financial planners. Understanding the challenges of rising rental rates, cost of living and housing scarcity, Gen Z is more inclined to explore innovative approaches to homeownership and seek guidance from financial experts. Acquiring financial insight has become a top priority, as they want to learn the best tactics for saving money quickly and understand methods to increase their savings.

Let’s explore some of the strategies Gen Z uses to pursue homeownership.

Leverage the expertise of real estate advisors

As real estate advisors, we recognize the challenges Gen Z faces. Real estate brokerages can offer solutions to help the next generation enter the housing market.

For example, a question we frequently hear is whether to rent or buy. Rental property options have deteriorated; many of the available apartments are targeted toward downsizers or wealthy immigrants. Finding an inexpensive rental is nearly impossible in the Halifax market. Advisors can provide valuable insights to answer these questions, guiding aspiring Gen Z homeowners through these difficult decisions and providing a deeper understanding of the current housing market.

Invest in multi-income properties to use rental income against mortgage expenses

A strategy for Gen Z to consider is multi-income properties as a viable means to afford homeownership, leveraging rental income to offset mortgage expenses.

For some, this means purchasing a property with close friends or family and embracing a collaborative approach by pooling resources to overcome financial barriers when entering the market. For others, the properties are purchased with the intention of renting units to viable tenants, offering homeowners support in monthly mortgage payments. 

Several years back, my Gen Z colleague purchased a duplex with two friends, living in one unit while leasing out the other to tenants. This approach has continued to gain popularity among Gen Z as a means to build equity and attain homeownership.

When it comes to investment safety, real estate investments continue to reign supreme. A multi-income approach for Gen Z is a way of getting their foot in the door and having an earlier start to homeownership. 

Education for Gen Z plays a pivotal role

We see education as a pivotal role, from training sessions, seminars and finance consultations. These can cover a wide range of topics such as navigating the real estate market, the benefits of multi-income ownership or financial advice from mortgage brokers and advisors. At our brokerage, we provide access to educational seminars and connect aspiring homebuyers with resources to ensure they are ready to be homeowners. 

Attending seminars and online workshops and consulting with financial advisors and real estate professionals provides Gen Z with the knowledge and tools to navigate the real estate market effectively. 

As the real estate landscape evolves, it’s important to support the next generation of homebuyers, as they have surpassed Gen X to become the third-largest generation. With guidance and strategic planning, embracing frugality and taking advantage of collaborative investments, Gen Z can be better prepared for success in Canada’s competitive housing market.