Housing Affordability Better for Gen Z Than Millennials

Housing affordability is certainly a factor for young professionals who must choose between renting and owning a home.

The good news for Gen Z is that the gap between renting and owning is smaller than it was for Millennials while incomes are higher, according to a recent RentCafe blog by Alexandra Both.

Zoomer’s wanting to own figure to fork out an extra $21,000 compared to those who rent by the time they are 30— a 14% difference, Both reported. Millennials faced a much steeper difference of 36%. That’s $46,000 more for Millennial owners compared to Millennial renters younger than 30.

RentCafe used historical housing costs and earning and spending patterns in nearly 200 metro areas through IPUMS data. Specifically, it looked at Millennials’ housing costs when they were the same age (22 to 29) for comparison and projections.

It is estimated that Gen Z, which numbers almost 66 million, will earn a total of $550,000 in their 20s. That’s 14% more than Millennials did before turning 30.

The study dealt with averages and pointed out that expected income and housing costs were higher in coastal markets, especially around Silicon Valley, San Jose, and San Francisco.

Both reported that Gen Z will be spending $145,000 on rent by the time they turn 30. Millennials spent $127,000 during the same stage of life (14% more).

“Notably, Gen Z’s renting costs account for 27% of their income from ages 22 to 29 – which is the same percentage as it was for Millennials – because Gen Z’s wages are higher today, Both wrote.

Homeownership costs would account for 30% of Gen Z’s income whereas Millennials used 36% of theirs toward owning a home.

Multifamily Spring:

Multifamily Spring is coming to New York City this April 18. This year’s program will bring together the industry’s most influential and knowledgeable real estate executives from the multifamily sector for 5 hours of face-to-face networking and over 5.5 hours of can’t miss sessions. Learn more or register here.