How housing hack is helping Gen Z millennials

As the high mortgage rate makes the affordability of homes difficult so house hacking is helping the Gen Z millennials to afford living at a reasonable cost. This new trend gained boom as the housing prices are ascending so housing hack is helping Gen Z millennials to embrace the unconventional solutions.  As house hacking is the practice of renting a particular portion of your property to generate additional income  to tackle the problem of all those who struggle to afford the down payment .

As per the Zillow report the survey done on 6500 home buyers between the duration of April to July showed a remarkable shift in house hacking. In another report, it is clearly written that 4 in 10 which is almost 39% of homebuyers says that house hacking is an extremely important opportunity.

 The key idea of House hacking

• Housing hack particularly refers to renting a portion of your home for the additional income
• Housing hack is helping Gen Z millennials and is regarded as an important opportunity as per the report by the housing market website known as Zillow.
•  The senior population scientist at Zillow, Garcia stated that the extra money “help make those dreams of homeownership penciled into reality, given that there are so many affordability constraints on the current market,”

Housing hacking – the secret to real estate success

As per the report of the Zillow survey half of the millennials, 55% and 51% of the Gen Z home buyers expressed positive feedback on house hacking. Also as per the report of real estate site Redfin, the median house price in the US was $413,874 in October. As the rates are continuously rising the average rate for 3-year mortgage hit 8% in October which is the highest ever recorded. The US home sales fell to a 13-year low in October as prices accelerate and more people start opting for house hacking.

How housing hack is helping Gen Z millennials to afford housing ?

 The primary reasons for the preference of housing hacking by Gen Z and millennials is as follows

 Higher Student Debt

Gen Z face the problem of the high student debt loans. Millennials along with Gen Z has the total debt of 3.68% of $1.57 trillion student loan debt in the U.S. Moreover almost all the entry level jobs in America require a degree so there is a huge wage between those who hold a degree and those who don’t.

 High housing cost

 The cost of the housing surged a lot in the recent years particularly in the urban area. As the supply of the homes are lesser than the total demand therefore the inflated house prices are out of the reach of the youngsters. House hacking is there to rescue Gen Z to afford homes.

 Lack of access to credit

 The high lending requirements makes the availability of the mortgage to young people a difficult task. Housing hack is helping Gen Z millennials to afford living without the tension of credit score and credit history.

 Unpredictable Expenses

 Financial challenges that include the medical emergencies often result in lashing the total budget . this also hinders the overall ability to save for the future. Even a normal house in a far off area is expensive in U.S therefore youngsters are opting the option of house hacking.

 Stagnant Wages

 There is a huge gap between housing cost and income so its quite  difficult for young adults to put enough money aside to buy house. As remote jobs have become a trend therefore companies are telling their workforce to not expect the cost of living amidst the lay offs.

 How much you need to afford home?

 As per the report of Redfin , an individual need a salary of $114,627 to afford a median size home in the U.S and the Median home price is approximately at the cost of $420,000 in the August .

 Daryl Fairweather, chief economist at Redfin stated that “In many places, you need to earn six figures to afford a starter home, so it makes sense for young people who are seeing how expensive homeownership is to want options,” she further added that with the availability of few smaller homes GenZ have to jump for expensive homes then they wanted.

Daryl Fairweather further discussed the issue by saying “Having the option to rent or have a roommate is important in an environment where there just aren’t that many small homes for sale,” therefore house hacking is of crucial importance as it provides the additional source of income that will help to cover the mortgage.

 What are the primary considerations for house hacking?

 Although renting a portion of the home does not require credit report it do require proof of steady income to pay for the monthly rent.

 Melissa Cohn , regional vice president of William Raveis Mortgage stated that “If you’re going to rely on rental income in order to qualify, you’ll have a problem,” She also added that “They need to prove they can afford the mortgage without the rent,” and Banks don’t give consideration to the rental income and require the person to qualify for financing without the support of full fledge rental income.

 Although if you buy a bigger house with the intention of renting out you have higher chances to pay greater mortgage rates and eventually fail to rent out the portion. So before you come to a decision it is important to consult the rental managers before you come to a decision.