Finding A Market In Gen Z

This year’s survey was conducted over three weeks in April 2023 and targeted Gen Z individuals, with 84% falling within the age range of 18-22 years. Similar to last year’s study, the survey also raised questions about how mortgage professionals and others in the financial services industry can better understand and help the upcoming generation of homebuyers.

The survey kicked off with an eyebrow-raising statistic: nearly 56% of respondents admitted that they aren’t actively managing their finances. Yet their goals were aligned with last year’s cohort to eventually be financially free from debt.

“The biggest finding year-over-year was overall the survey told us that this particular cohort is very much thinking about ultimately owning a home,” said Brian Vieaux, FinLocker’s president and chief operating officer. “Where ultimately, that was not as much evident in last year’s survey.”

Watch it on The Interest: Shooing In The Next Generation

Learning about Gen Zers’ short and long-term financial goals was a key area in the survey. The top priority of being financially free came with a desire for financial education, unlike last year’s findings. Other priorities identified were paying off student loans, car loans, and credit card debt. The survey also included that the average Gen Zer is just shy of $21,000 in debt.

It Starts At Home

Good financial habits aren’t developed overnight. FinLocker’s findings included that most of the respondents focused on learning and exercising good financial practices based on what their families and friends taught them. Jade Bahng, a member of the American Marketing Association at USC and a sophomore, says that something that alarmed her about the survey was how her peers weren’t integrating good credit practices into their daily lives, even though they knew it was necessary. “Gen Zers are still learning how to be financially fit and how to build a credit score, but a lot of people in the focus groups weren’t putting that into practice yet, they were still in the stage of learning and gathering financial information,” said Bahng, who is also a member of Gen Z. “Our habits and actions and methods of using credit and using debit were still very based on what we learned from our families.”

Vieaux said that the survey identified the concept of a “fin-fluencer,” meaning a social media talking head who offers financial advice. “Where these young folks are going for information is logically first their parents but then the next source is social media and following financial influencers who are educating through social channels on financial fitness and wellness,” he said. “Those influencers become a part of their trusted resources.”

Like the survey’s findings, Bahng says she was in the majority group that sought financial advice from relatives and friends, and she admitted that many of her credit habits came from her parents. But she also noted that her definition of homeownership — and her peers' — differed from the previous homebuying generation. “I think the idea of homeownership has evolved from my parents’ age to my age, and [for] Gen Z now … homeownership has become this eventual, later, idealistic goal, but not something that we’re looking into right now,” Bahng explained, alluding to the 43.5% of survey respondents who said they hoped to buy between ages 28 and 32. “Maybe that’s because Gen Z has become known as this proactive, entrepreneurial generation and nobody knows what our next step is going to be. There are jobs that didn’t exist before that we’re coming up with, so that means Gen Z has a moving and migrating mindset.”

But even though Gen Z is focused on saving and paying off debts, they’re still hopeful to buy early. Only 13.89% of respondents anticipated buying between ages 33 and 37 — close to the National Association of Realtors (NAR) national average of first-time homebuyers age, which was 36.

Bahng also noted that many of the focus groups in the survey identified financial influencers as an educational resource to refine their financial fitness. Gen Z doesn't accept at face value what experts say even if they are deemed credible and are verified by social media platforms, Bahng said. “You never know who can give good financial advice; we asked what Gen Zers value and how they cross-check information. And it turns out that they’re tuning in to many different platforms and seeking a wide array of information before making financial decisions.”

Playing It Safe

Bahng doesn’t seem to suggest that Gen Zers are behind on financial education and homebuying knowledge. She says that being able to use advice from other adults as well as find what works for her — like integrating a financial tracking service into her daily life — has helped her create a plan for when she graduates. “I just completed my freshman year, so learning about homeownership and finances opened a lot of doors for me to start planning early,” she said. “Luckily I have side jobs, scholarships, and work-study programs that allow me to live while in school. I’m putting away my other money with the eventual goal of buying property after graduation.”

The survey revealed that Gen Zers prefer to play it safe when it comes to their saving strategies. A good chunk of respondents — 41.98% — say they’re primarily saving in a savings account. Last year, Vieaux pointed out that 5% of survey respondents reported putting their savings into crypto assets. But this year, that number shrunk to below 1% — potentially due to the crypto crash.

So it makes sense that survey respondents also expressed the desire for a hybrid mortgage experience for when they do buy a home, meaning both online and in-person interactions with trusted financial professionals. “This cohort wants to self-serve to a degree: they want to have access to information and have the ability to do things themselves, but it’s important for them to connect with a trusted resource and professional when they have questions,” said Vieaux. “I don’t think we’ll see 100% online [mortgage experiences], especially for first-time buyers. That means the role of the local LO today is more important than it’s ever been, especially if they’re able to combine digital with their expertise and trusted experience.”