The real estate industry is an exciting place to be right now and the future looks even more interesting.
We’re almost done talking about Millenials.
There’s a rising generation of potential home buyers and tenants as Generation Z steadily starts flitting towards the real estate market.
At this point of time, the oldest Generation Z homebuyer/renter would only be 23 years of age.
It will be your job, in the future, to find them a home.
To effectively do this you’ll need to understand what actually makes this generation tick, their likes, preferences and language in life and the tribes they move in.
Generation Z and what makes them tick
Every generation shows signs of a paradigm shift from the one earlier. The same is applicable when you look at Generation Z.
Their belief systems and way of living are radically different from that of both Baby Boomers and Millennials.
Here are some characteristics that describe an average Generation Z individual:
- They’ve had to pay for their higher education and may already have a debt to repay
- They are more educated, particularly in a digital sense
- They’ve witnessed the excesses of previous generations and are showing signs of being risk-averse (In the US, they reflect lower rates of drug use and alcoholism)
- They would find it hard to remember a time without digital devices and are consistent users of technology which they rely on in both their personal and professional lives
- This generation is more culturally diverse than any of the generations before
- They are used to being empowered by platforms to speak their minds (you only need to look at Greta Thunberg to understand this)
- They have a social conscience that appears greater than the generations before them.
Having some experience with this generation (a daughter), one of the interesting characteristics of Generation Z is that while they are more conservative than say Millennials, they are not afraid of taking an entrepreneurial path (eg as a freelancer) rather than going for a traditional job and career path.
Some of the older Gen Z’s witnessed the GFC and its fall out, and therefore perhaps being more self-reliant makes them feel more secure than, say, a job which could be gone at any moment.
Generation Z and their impact on real estate trends
At a REALTORS conference held in Orlando a couple of years ago, real estate professionals invited a panel, Generation Z Consumers, that consisted of five members. This panel shared insights on how Generation Z’s demand for real estate was going to shape the real estate market in the future.
Following are some of the points that were shared during the panel discussion:
- Generation Z truly values the concept of home-ownership
- The majority of them see home-ownership as the ultimate goal of their life
- About 97 per cent of them believe they will own a home in near future
- 81 per cent of them would like to consult a real estate professional for the buying process
- They prefer finding out about buying options from social media sites such as Twitter, Snapchat, or Instagram
- The majority of them hope to buy their first home by the time they are 26-30 years old.
Plus a couple of other points that I can add based on some family conversations:
- When using social media sites like those mentioned, it will largely be word of mouth delivered through their sphere of influence; ephemeral content being king
- If they are to consult a professional, they will expect a suitable list of properties to be provided – curated with the personal needs in mind
- You’d better not give them cause to meme you in any way, that’s when they decide to move on…
What type of homes will Generation Z want to live in?
While Millennials gave micro-apartments and tiny homes a rise in popularity, it seems Generation Z puts a lot of importance in having space.
They would prefer to move out of their cramped and shared, rented apartments and move into somewhere more spacious, especially if it means living with other like-minded people who share a similar passion for a hobby or a career.
This may see the co-living, build-to-rent trend really take off in the coming years.
With the proliferation of cloud software, we all have the opportunity to work from wherever.
No longer do we need to live and work in the same place.
Generation Z sees the world as their oyster and full of opportunity (and rightly so!)
The subscription economy
Michael Barlow, CEO of a ‘furniture as a service’ startup said, “Generation Z is not going to have the expectation of buying, owning, moving, selling and storing furniture every time they move and go between different jobs or different life moments…”
While Gen Z clearly sees home-ownership as a goal, it’s also important to understand they have grown up in the subscription economy.
So, like the Millenials before them, they are aware they can rent homes, clothes, cars, experiences, even pets.
But Gen Z will want to know that it’s all been done in an environmentally sustainable way in an energy-efficient way.
However, while Generation Z favours energy efficiency, continuous connectivity and access to smart home and smart appliances is going to be a must in order to maintain their 24/7, digitally connected lifestyle.
All of this presents big opportunities for the real estate industry
If you are thinking about building a business that lasts, you might want to factor some of these points into planning for the future, as I believe some of the clues to success with future customers of the real estate industry can be found by studying Gen Z.
But you’ll need to sharpen your skills and open your minds.
- You’ll need a black belt in communication to understand the language they speak
- You’ll need a good group of translators in your business to amplify your brand to a younger cohort of digital natives to find tenants and buyers in places you never imagined
- If you have capital, you might be able to find ways to sweat assets in the rental economy – in ways you never imagined – to be in the business of renting more than just property
- You’ll need to be nimble and join the dots aligning services and trades quicker than they can
- You’ll need to be socially aware and have a business with a story they can relate to.
Lastly, I get that thinking about the next generation of ownership is probably something that is far, far from everyone’s minds right now.
But to build a business that lasts, look for the opportunities; don’t prioritise easy, prioritise progress.