Move Over Millennials. Here Comes Generation Z, the Next Wave of Home Buyer

 
Real estate agents who connect now with this large, tech-savvy generation will be uniquely poised to capture tomorrow’s growth.

They’re entering their early 20s. They’re educated. They’re launching their careers. And even though they’re young, hundreds of thousands of them have already bought their first homes.

Generation Z (generally recognized as born between 1997-2012) have never known a phone that wasn’t smart. Their world, for better or worse, has revolved around social media. And while they find vintage technology like typewriters and vinyl records quaint, they have little patience for companies who have a retro way of doing business. They want immediate communication, transparency and technology-enabled efficiency.

To connect with this generation and gain their trust, real estate agents of all ages need to treat them with respect, offer lots of education and communicate on their level using personalized,

Growing Up in an “Always On” Tech Society

 
According to a recent Pew Research Center analysis of U.S. Census Bureau data, Generation Z is unlike any other previous generation. They are on track to be the most diverse and highly educated generation yet, with the eldest entering college at a higher rate than millennials of the same age.

One of the defining factors of this generation is their relationship with mobile technology. Apple launched its iPhone in 2007, when the oldest Gen Zers were in the sixth grade, setting a new trend for how this generation communicates.

The typical Gen Zer primarily accesses the web through mobile devices, Wi-Fi and high-bandwidth cellular service. Whereas millennials adopted social media, on-demand entertainment and purely digital communication as they entered adulthood, these emerging technologies have always been a way of life for those born after 1995.

According to Pew Research, the implications of growing up in an “always on” technological environment are only now coming into focus. Recent research has shown both positive and concerning dramatic shifts in youth behaviors, attitudes and lifestyles that characterize those who came of age in this era.

Not surprisingly, social media has played a prominent role in their lives — so much so that the celebrities they like and trust most for advice are social media stars, particularly the ones who come across as truly genuine.

Despite Generation Z’s habit of posting every part of their lives on social platforms, they are more careful with their privacy than previous generations and are especially sensitive to marketing strategies they may view as intrusive violations of their privacy, according to Katie Sehl of social media platform Hootsuite. With this generation, authentic, non-invasive, personalized communication makes the strongest connection.

Dreaming of Home Ownership

 
While the housing crash of 2007-2012 deeply affected millennials’ views about buying a home, Generation Z has come of age in a time when the real estate market has enjoyed a continuous upswing. Most of them have no memory of what it’s like for a family to be upside down in their mortgage.

In fact, they’ve only seen the opposite problem. In their experience, home values have increased much more quickly than wages, making affordability a challenge.

According to research by HR consulting firm n-gen, Generation Z has grown up in households where two incomes barely enable the same standard of living as a single income in the 1970s. “Households are now squeezed for income because housing prices have nearly doubled,” reports the firm. “In fact, young people today will need to save up to three times longer for a 20% down payment on a house.”

Despite these challenges, the young people n-gen surveyed were optimistic. Their research revealed that 65% of Generation Z feel that, overall, their generation has much better opportunities than previous generations.

Perhaps this cohort has good reason to feel positive about the future. According to Hootsuite, they have more fiscally responsible attitudes than previous generations, with 85% agreeing that it’s important to save for the future and 63% describing themselves as savers, with only 37% calling themselves spenders.

With this 60 million strong generation already moving into their home buying years, agents should begin connecting with them now.

5 Ways To Connect With Generation Z

1. Build trust through transparency

Every person is unique, no matter their generation. However, there are certain assumptions about the world that differentiate people according to age.

Representing the most ethnically diverse population in history, young people in Generation Z tend to be more inclusive than previous generations. When asked about workplace values, 76% rank a job with a company that is diverse and inclusive as important, Hootsuite reports.

They’ve been target-marketed their whole lives and so to cope with the daily barrage of ad messages, they’ve developed a keen sense of differentiating what’s genuine and what’s fake. According to business author Marcia Layton Turner, Generation Z values honesty and transparency.

“Explaining what’s happening and why helps build trust and loyalty, especially when confidential details are revealed,” says Turner.

This younger client also tends to see less need for formality, especially with people who are older or in authority. According to Wharton Business School professor Stephanie Creary, Generation Z is more comfortable with a flattened hierarchy, where they can treat everybody (including their boss) as a friend. This information can be particularly of interest to real estate brokers as they consider communication styles with these new, younger agents.

2. Craft the right message

Because Generation Z consumes information and interacts socially primarily through mobile devices, this has completely changed the way in which businesses market to this audience.

According to Mobile Marketing Watch, texts, on average, enjoy a 98% open rate versus an average 20% open rate of emails. Also, text messaging marketing firm SlickText found that the average person reads a text within 5 seconds of receipt and responds to it within 90 seconds compared to the 90 minutes it takes on average for someone to respond to email.

That’s one of the reasons dotloop launched its revolutionary text Messenger tool in 2018. In addition, to giving agents complete mobile freedom to fully transact wherever they go, Messenger enables agents and admins to move the transaction forward faster by providing clients with the communication form they favor most and thus improving client response times.

An oft-cited Microsoft study on young people’s attention spans found that Gen Zers spend more time in what’s described as “alternating attention.” In the course of a few minutes, they quickly jump from one social media account to another, flitting between subjects, circles of relationships and platforms. And when consuming streaming entertainment (such as Netflix), they usually have their phone out, alternating between the two screens.

According to Hootsuite, “Your content needs to get to the point faster, not talk down to the audience and recognize their fast pace of life better than previous marketing generations managed to do.”

At the same time, this generation is hungry for how-to information about being successful in life. They’re most likely entering the working world near the bottom rung and are already on a steep learning curve for their career.

An experienced real estate agent who can help them achieve the seemingly impossible milestone of homeownership is someone they regard as a worthy connection.

3. Choose the right channels

Legendary media critic Marshall McLuhan famously said, “The medium is the message.” In the same way, the preferred channels of Generation Z determine the kinds of posts that will be most effective.

This cohort has been gravitating away from Facebook (it’s their grandmother’s platform) and toward Instagram, YouTube, Snapchat, and to a lesser extent, Twitter. Younger women are also heavy Pinterest users, while younger men are more likely to be found on Reddit.

According to Hootsuite, Generation Z turns to YouTube (24%) as its most popular platform for shopping recommendations, followed by Instagram (17%) and Facebook (16%).

The way these various channels are consumed puts an emphasis on brevity. Limits in screen size and number of displayed characters have conditioned the Gen Zer to absorb information in small bites, meaningless text, more images and shorter videos. On average, marketers have about 8 seconds to capture the Gen Zer’s attention before they scroll past your ad.

This young tech-savvy client is skilled at glancing at a post and in a split second deciding if it’s in any way relevant to them. Unlike any other generation, the Gen Z client consumes new tech tools to tell the real estate story, including virtual reality, live video and 360 video views of a property. Those agents who convey their selling proposition with pictures that intrigue, videos that engage and brief messages with an immediate takeaway will win big with this generation.

4. Deliver consistently

Delivering your message with consistency is essential for connecting with any demographic. However, it’s especially true for reaching Generation Z clients, who receive most of their marketing messages through the small screen. For example, Hootsuite research shows that 85% of these young adults learn about new products on social media and are 59% more likely than older generations to connect with brands on social.

To connect with Generation Z where they’re most comfortable, agents must use their social channels consistently. This means having a consistent message, look and posting schedule. Like tending a garden, nurturing a social media presence must be a commitment for the long term.

Of particular interest, so-called influencers are most likely to capture the hearts and minds of Generation Z. Influencers are interesting people who share aspects of their real lives (or at least an edited version) continually on social media. The influencer typically talks directly and informally to their audience. Generation Zers love this content for its authenticity. To them, agents who share “canned content” (purchased content that many other agents are also posting) will appear fake and insincere.

5. Be ready to respond

When it comes to social media, members of Generation Z don’t seem to care how many followers an influencer has. In fact, according to the influencer marketing network firm Markerly, nano-influencers (1,000-5,000 followers) have up to four times the engagement rate as influencers with 100,000 followers or more.

“Because their follower numbers are so small, nano-influencers still feel like everyday people to fans,” reports Markerly. For this reason, nano-influencers are more likely to have an engaged relationship with their followers. “That engagement keeps fans hooked,” Markerly reports.

So while the typical Gen Z client may be guarded about his or her privacy when it comes to mass marketing, this client is also seeking personal interaction. When a young twenty-something reaches out to an agent via an Instagram private message, that agent should respond quickly and avoid abusing that connection with spammy content.

According to Hootsuite, private and direct channels are so effective with this generation that Facebook (which owns Instagram) is planning to spin off a standalone Instagram messaging app called Direct.

A Generation Waiting To Be Defined

 
It’s important to remember that the trends and behaviors of clients who are now in their late teens and early 20s should not rigidly define them as they move into the next phases of their lives. For example, members of Generation X may have a nostalgic soft spot for Beverly Hills 90210, but their favorite shows today bear little resemblance to the rich kids’ drama.

In the same way, the individuals who make up Generation Z will most likely spend less time on Snapchat and more time on LinkedIn as they look to launch their careers.

Jay Jacobs, head of research and strategy at Global X, which has created investing funds specifically tailored for millennials, says that there can be clear and obvious differences in the ways that certain generations spend their money. “As Gen Z eventually enters their prime earning years, some of these trends could start to become more concrete and visible,” says Jacobs.

Of course, this will include their approach to homebuying. Real estate professionals can’t afford to ignore Generation Z. At an estimated 60 million, they make up almost 26% of the U.S. population. While their impact on the housing market is just now being felt, agents should prepare for working with what will soon become their next sizeable and significant home buying cohort.