An analysis of Census Bureau data found that while Generation Z is definitely rent burdened, millennials may have had it worse.
Earlier this year, we reported that Generation Z has emerged as the generation driving the most rental demand, supplanting millennials, who are slowly making the transition to homeownership. You might think, given the crunch of the post-pandemic housing market, that Zoomers are also more rent burdened than their predecessors were a decade ago. But a new report reveals that millennials actually had it worse.
The report, from Zillow and its New York City brand StreetEasy, analyzed data from the U.S. Census Bureau’s American Community Survey in 2022, and found that nearly half of all American renter households were burdened by rent costs, “with Gen Z renters shouldering the heaviest load.”
But while 58.6 percent of Gen Z renters nationwide were rent burdened in 2022, 60.2 percent of millennials experienced rent burden at the same age in 2012. (The report defined “rent burdened” as spending more than 30 percent of income on housing expenses. It compared renters aged 18 to 25 in 2012 and 2022, excluding renters who were not working.)
While more recent data was not publicly available, the comparison is notable because the U.S. housing shortage “has gotten only worse,” said Kenny Lee, a senior economist at Zillow and StreetEasy. In 2022, there were around 5.2 million Gen Z renter households in the United States. With an annual median gross rent of $16,980 and an annual median gross income of $42,000, they were spending around 40 percent of their income on rent.
“A low inventory really makes it difficult for local housing markets to find a balance between supply and demand,” Mr. Lee said. “That puts higher burden on young adults who often make lower income because they are still early in their career.”
But if the pandemic tightened the screws on Gen Z renters, it still wasn’t as bad as the housing crash in 2008 and 2009. Mr. Lee said the share of rent-burdened young adults peaked in 2011 at 62 percent. The following year, 60.2 percent of millennials were still spending more than 30 percent of their income on rent, but gradually declined from there, to 55 percent in 2019. It spiked again as surging demand following the pandemic, coupled with decades of undersupply, “led to sharp rent increases across the country,” according to the report.
As always, the numbers vary by region — even within states. The share of burdened renters in Austin, Texas, fell 9.6 percent from 2012 to 2022, while in Houston it increased by 11.9 percent. And in California, some Gen Z renters were more rent burdened in 2022 than millennials had been, with three cities topping the national list: San Diego, where 73.4 percent of Gen Z renters were burdened, followed by Los Angeles (71.7 percent) and Sacramento (71 percent).
Cre: The New York Times
