The dream of homeownership is becoming increasingly challenging for Gen Zers, with 22% of them citing a lack of affordable starter homes as a barrier. To address this issue, many are turning to fixer-upper homes, which offer an opportunity for savings but also come with potential risks and regrets.
The Allure of Fixer-Upper Homes
A fixer-upper home is an existing property that requires varying degrees of maintenance work and is typically priced lower than move-in ready homes. According to a survey conducted by Clever Real Estate, 57% of Gen Zers are willing to invest in a fixer-upper, seeing it as a cost-effective way to enter the housing market.
While buying a fixer-upper may seem like a wise financial decision in the short term, many Gen Zers who have taken this route are experiencing buyer’s remorse. The study found that 27% of Gen Z homeowners who purchased fixer-upper properties regretted their decision, highlighting the unforeseen challenges and costs associated with renovations.
Expert Insights
Experts caution that first-time buyers may underestimate the true costs of homeownership, especially when it comes to renovations and repairs. Marine Sargsyan, a staff economist at Houzz, emphasizes the importance of functionality in a home, advising buyers to consider the current condition of the property before making a purchase.
On the surface, investing in a fixer-upper home can lead to significant savings, with the median cost being 29% lower than that of move-in ready homes. However, the allure of affordability can quickly fade when buyers are faced with unexpected repair costs and safety issues, such as asbestos exposure, which 56% of Gen Zers surveyed were willing to overlook.
Key Considerations for Potential Buyers
Before committing to a fixer-upper investment, buyers must conduct thorough due diligence on the property. This includes inspecting key areas such as the roof, plumbing, electricity, walls, stairs, and overall land. Understanding the potential repair and renovation costs associated with these areas is crucial to making an informed decision.
While fixer-upper homes may offer an attractive entry point into homeownership for Gen Zers, they also come with risks and challenges that need to be carefully evaluated. By weighing the financial benefits against potential pitfalls and conducting proper inspections, aspiring homeowners can make an informed choice that aligns with their long-term goals and financial capabilities.