Why Gen Z is Embracing Fixer-Upper Homes: Opportunities and Challenges
Gen Z is proving to be a generation of savvy homebuyers willing to roll up their sleeves and invest in fixer-upper properties. According to a recent report by Clever Real Estate, about 57% of polled Gen Zers are open to purchasing a fixer-upper home. The appeal lies in the potential savings, as the median sale price of a fixer-upper is approximately $283,000—around 29% cheaper than a move-in-ready home, based on data from StorageCafe.
The Appeal of Fixer-Uppers
With the rising cost of homes, many young buyers find it challenging to enter the housing market. About 22% of Gen Zers cite a lack of affordable starter homes as a significant barrier to homeownership. Fixer-uppers provide a solution by offering a more affordable entry point into the market. By investing in a property that needs work, these buyers can potentially build equity and create a home tailored to their tastes and needs.
The Reality Check
However, the reality of owning a fixer-upper can be daunting. Among Gen Z homeowners who bought fixer-uppers, 27% regret their decision. The main reasons are the unforeseen costs and the extensive work required to make the home livable. Jaime Dunaway-Seale, a data writer at Clever Real Estate, notes that many first-time buyers are unaware of the true costs of homeownership and renovations.
Key Considerations for Fixer-Upper Buyers
If you're considering buying a fixer-upper, being well-informed and prepared for the challenges ahead is crucial. Here are five key things to watch for:
Roof: Ensure the roof is in good condition. Leaks can lead to significant internal damage, and roof repairs can be costly, averaging around $12,000.
Plumbing: Check the condition of the pipes and plumbing system. Older pipes, particularly those installed before 1980, are prone to breaking and may require significant repairs.
Electricity: Evaluate the home's wiring and electrical system. Ensure it meets current safety standards and hassufficient capacity to handle modern electrical demands. Upgrading an electrical system can cost around $2,000.
Walls and Stairs: Inspect walls for cracks and signs of structural issues. Check stairs for safety, as these can be expensive to repair if significant damage is found.
Overall Land: Understand the land the house is built on. Look for signs of flooding or structural issues that could indicate problems with the foundation.
Financial Planning and Renovation Costs
While buying a fixer-upper can mean short-term savings, budgeting for renovation costs is essential. In 2023, 51% of surveyed homeowners spent $25,000 or more on home renovation projects, according to the 2024 U.S. Houzz & Home Study. Most homeowners use savings to fund these projects, but an increasing number are turning to credit cards, with 37% using them in 2023, up from 28% in 2022.
Making the Right Choice
For Gen Z buyers, purchasing a fixer-upper depends on a willingness to compromise and invest time and money into making a home livable and functional. As Susan Wachter, a real estate and finance professor at The Wharton School, points out, young buyers are making trade-offs because of high housing prices. While a fixer-upper can be a smart financial move, it requires careful planning and consideration of potential risks and rewards.
Conclusion
Fixer-uppers are an attractive option for Gen Z homebuyers looking to enter the affordable housing market. However, the journey from purchase to a dream home is fraught with challenges that require significant planning, budgeting, and resilience. Understanding the key considerations and potential costs involved allows Gen Z to make informed decisions and turn their fixer-upper into a valuable investment.