Generation Z Renters Moving On Up

More young adults are returning to the rental market, reported Zillow, Seattle.

Concessions including a month or more of free rent appear to be luring Generation Z out of their parents’ basements and back into the rental market. Zillow found more Generation Z adults between 18-25 who had been living with family or friends now rent, and most said they got a good deal on their new rental.

Rent concessions climbed from 16 percent to 30 percent between January and August. Since then, the share of rentals offering concessions has stabilized at about 34 percent nationally in October. These concessions can add up to big savings for renters. Concessions offered in six large markets–Boston, Chicago, Indianapolis, New York, Philadelphia and Washington, D.C.–amounted to savings equal to two months of free rent on a 12-month lease. In the 50 largest markets, the minimum median savings rate was 8.3 percent, Zillow said.

“The effective savings rate is what renters would save on their typical housing costs over the course of their lease because of both lower rent prices and concessions,” said Zillow Economist Joshua Clark. “Those savings could be enough to cover the cost difference between a one-bedroom and a two-bedroom unit. Plus, if these Gen Z renters who moved home retained their jobs through the pandemic, they’ve likely saved enough to afford a larger or more desirable apartment.”

First American Financial Corp. Chief Economist Mark Fleming noted household formation has continued to grow even during the pandemic, ā€œlargely driven by [Generation Zā€™s] accelerating demand for housing,ā€ he said.

Nearly 60 percent of Generation Z renters cited finding a better deal on rent as a reason for their move, but 58 percent of those who moved from a previous rental said they’re now spending more, suggesting that many feel their rent dollar is stretching further.

“What we’re seeing is that renters who might have been in a small apartment are instead looking at larger units–maybe a two-bedroom instead of a one-bedroom,” said Kenny Truong, Founder of Fast Real Estate, Oakland, Calif. “Some others are moving to a rental with a view or a yard for a similar price.”