Just like the average Singaporean, young Americans also dream of buying their own homes. But with many Gen Z in the US burdened by debt, it may take longer for them to finally afford that dream.

According to Yahoo Finance, citing a Newsweek poll, Gen Z holds an average of over US$94,000 in personal debt, significantly higher than Millennials, with nearly US$60,000, and Gen X, with about US$53,000.

In fact, National Debt Relief chief compliance and consumer affairs officer Natalia Brown told Fortune that about a third of them are drowning in debt due to inflation, high interest rates, and pay that hasn’t kept pace with rising costs.

She noted the debt feels heavier as Gen Z are just starting out in their careers. Combined with buy-now-pay-later (BNPL) services, credit cards, and medical bills, it quickly snowballs into more debt.

The reality of homeownership in the US

Notably, Gen Z makes up only 3% of homebuyers in the US, according to data from the National Association of Realtors (NAR), though it’s not surprising given the nearly 7% mortgage rates there.

NAR and Social Security Administration data revealed that the national average wage in the US is just US$66,000, while the median home price there is over US$403,000.

Besides, with a 20% down payment, today’s mortgage rates, and the national average wage, buying a home would take up more than a third of someone’s monthly income.

Financial advice for Gen Z on debt and homeownership

New York City Sotheby’s International Realty associate broker Nikki Beauchamp told Fortune: “The cost of homes is way higher than it was for previous generations, and you don’t see as many starter homes being built or available.” She added that with student loan debt on top of that, Gen Z may be carrying more debt than Gen X did at the same age.

Financial advisors said that for Gen Z struggling with debt, it’s important to first determine “how much room, if any, there is for a mortgage payment.” If debt levels are already too high, it’s best to focus on paying these down first.

They also recommended avoiding BNPL services, as small, repeated purchases can quickly add up.

Meanwhile, Ms Beauchamp added to look into co-ownership or fractional ownership to get on the ladder of property ownership. /TISG

Read also: Gen Z discussion: Many young adults say home ownership now feels impossible