A new report reveals that some Gen Zers who purchased fixer-upper homes now regret their decision.

• A recent report by Clever Real Estate indicates that approximately 57% of Gen Zers are open to purchasing a fixer-upper home.
• A fixer-upper house typically costs around $283,000, which is about 29% less than a move-in ready home, according to StorageCafe's analysis of data from Point2, a real estate site.

A new report suggests that 22% of Gen Zers view a lack of affordable starter homes as a hindrance to homeownership. Some individuals believe that fixer-upper homes could be a solution to this problem.

An existing house that requires varying degrees of maintenance work and is usually sold at a low purchase price, according to Redfin's definition, is known as a fixer-upper.

A recent report by Clever Real Estate found that over 57% of Gen Zers surveyed are open to making an offer on a fixer-upper. The study polled 1,000 Gen Z adults aged 18 and above, with 126 being homeowners and 874 not owning a home.

According to a report, about 27% of Gen Z homeowners who bought a fixer-upper regret their decision, which accounts for 40% of Gen Z homeowners.

Experts say that it's common for buyers of fixer-upper properties to feel overwhelmed, despite the small base of homeowners in the survey.

Jaime Dunaway-Seale, data writer at Clever Real Estate, stated that many first-time buyers are unaware of the true costs of homeownership and how renovations and repairs can significantly increase these expenses.

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Purchasing a fixer-upper home may result in short-term savings, but it's crucial for potential buyers to consider the costs of renovations and the current functionality of the home, according to Marine Sargsyan, staff economist at Houzz. For instance, if the new home lacks a usable bathroom, it could hinder your ability to move in promptly.

"Functionality is key. Any item in your home must serve a purpose," she emphasized. "If it fails to do so, consider the cost of replacing it."

'Young buyers are having to make trade-offs'

For many Americans, the high cost of homeownership makes a fixer-upper home a more affordable option in the short term.

A fixer-upper house costs approximately $283,000, according to a May report from StorageCafe, which analyzed data from its sister division, Point2. This is 29% lower than the cost of a move-in ready home, resulting in savings of approximately $117,000 for buyers.

According to Susan Wachter, a professor of real estate and finance at The Wharton School of the University of Pennsylvania, young buyers are facing trade-offs due to the high cost of housing.

A significant number of Gen Z buyers are willing to purchase homes with significant disrepairs or outdated features, despite the risks involved. In fact, over half of Gen Zers surveyed by Clever Real Estate said they would buy a home with asbestos, a mineral fiber that can increase the risk of developing lung diseases if exposed to it.

Ensure the safety and livability of the house before purchasing it for renovation, advised Sargsyan.

Ensure that the house is free of toxins, she stated.

Significant repair costs can be generated by a fixer-upper even without extreme deterioration. According to the 2022 American Community Survey by the U.S. Census Bureau, many of the existing homes in the U.S. were built decades ago, with the median age of owner-occupied homes being about 40 years old.

Recently, Jessica Lautz, deputy chief economist at the National Association of Realtors, told CNBC that homebuyers often have to make compromises, usually concerning the age or condition of the home.

In 2024, 51% of surveyed homeowners spent $25,000 or more on home renovation projects, an increase from 44% in 2021, as per the 2024 U.S. Houzz & Home Study. The study was conducted by Houzz, which surveyed 33,830 homeowners aged 18 and older from January 19 to February 27.

Homeowners are increasingly using credit cards to fund renovation projects, with 37% paying for their repair projects with credit cards in 2023, up from 28% in 2022.

Five things to watch for in a fixer-upper house

Before purchasing a fixer-upper, it is recommended to inquire from the home seller or real estate agent about the property's construction date. Experts suggest asking questions about the house's history and any potential problems that may arise during the home inspection process. To ensure a thorough inspection, it is recommended to hire a professional home inspector who can identify any issues with the property.

If you're thinking of purchasing a fixer-upper house, here are five additional factors to consider.

• Sargsyan stated that if your roof is leaking, you need to determine the cost of repairs, which can be substantial, and also assess the damage caused by the leak within your home. According to Houzz, the median cost of roofing upgrades is approximately $12,000.

• Discover the state of your home's plumbing system, including the location, direction, and last upgrade date, advised Sargsyan. As per Short Elliott Hendrickson, Inc., older pipes made of cast iron or clay are more prone to break or crack, which were commonly used before 1980.

• Determine the condition of the home's wiring and when it was last updated. Older homes may lack safety devices such as ground fault circuit interrupters. Examining the electric panel can provide insights into the home's wiring system, according to Loppolis Electric, Inc., an electrical contractor company in Pawling, New York. The median spend on electrical system upgrades increased to $2,000 in 2023 from $1,800 in 2020, as found by Houzz. "It's crucial to comprehend the overall capacity of your electrical system because you don't want to overload it and cause an outage for yourself," Sargsyan stated. "That's also an important factor to consider."

• Ensure the safety of walls and stairs, Sargsyan advised. Cracks in walls and ceilings, uneven floors, and difficulty opening and closing doors may indicate underlying issues, according to Perma Pier, a foundation repair company in Texas. Additionally, make sure the stairs are safe to walk on, Sargsyan added.

• "What if the weather changes in recent years and it rains too much, causing problems with the house built on the land?" she asked.