Their experience mirrors what millennials went through a decade earlier
Housing costs continue to rise and a new survey shows nearly half of all U.S. renter households are burdened by rent costs, meaning their rent takes more than 30% of their income.
A new analysis of U.S. Census Bureau data shows Gen Z renters face the most challenges. Real Estate marketplace Zillow shows found three in five Gen Z renters ages 18 to 25 spend more than 30% of income on housing expenses.
In 21 of the country's 30 largest metros, that share is even higher. In San Diego, Los Angeles, and Sacramento, for example, nearly three-quarters of Gen Z renters are rent-burdened.
As challenging as that is, Gen Z may get little sympathy from millennials, the generation ahead of them. In 2012, 60.2% of Millennials nationwide spent more than 30% of their income on rent. Rent burden on young adults peaked in 2011 but gradually declined to 55% by 2019.
The following year brought the COVID-19 pandemic, which turned the housing market on its ear. Low mortgage rates sent home prices to record highs and rents were close behind.
Surging rental demand following the pandemic coupled with decades of undersupply led to sharp rent increases across the country.
"The experience of struggling to pay rent on an entry-level salary is familiar to so many of us that it's almost become normalized in our society," said StreetEasy Senior Economist Kenny Lee.
Should not be normal
"But this is something that should not be normal. Rent burden makes it a struggle for these young adults to afford the other expenses in their lives things like student loans and medical payments. It's deeply damaging to their ability to save for future life goals, like one day owning a home."
Millennials are living proof of that and have the financial scars to prove it. In 2012, millennials were more likely to be rent-burdened than Gen Z renters in 2022 in 17 of the 30 largest metros.
Austin saw the largest decline in the share of rent-burdened young adults through the past decade, while Houston saw the most dramatic increase.
"While these large metropolitan areas may be known to have more expensive housing, we have to recognize that they're also where the jobs are," said Zillow Rental Trends Expert Emily McDonald.
McDonald says some Gen Z renters can choose to live in a city where rents are more affordable but that might not be where the best jobs are, and having an affordable rent could come at the expense of their career.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-10-25 13:15:10