Gen Z Is Paying More To Rent Than Millennials Did at Same Age, Study Shows

KEY TAKEAWAYS

• Gen Zers will pay about $145,000 on rent by the time they’re 30, $18,000 more than the adjusted cost for Millennials at the same age.
• However, homeownership is slightly less expensive for Gen Z than for Millennials.
• Housing costs have ballooned since the pandemic, and high interest rates will play a factor in renting and buying moving forward.

Renting is more costly for members of Generation Z than for their predecessors, but buying a home may be more affordable, according to a new study.

Members of Generation Z, defined by this study as those born between 1994 and 2000, will spend $144,557 on rent by the time they’re 30, according to a survey from RentCafe, a rental market research site. That’s about $18,000 more than the adjusted costs for Millennials, who were born starting in 1981, when they were the same age.

However, it’s not all bad for Gen Z, as the study showed they would face lower costs for home ownership, totaling $165,206, about $7,000 less than what Millenials paid to own a home. Gen Z is also expected to do better on pay than their Millennial predecessors, earning 14% more on average by age 30.

“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,” the report found. 

Inflation has pushed up costs for both renting and buying housing since the economy has rebounded from the pandemic. Stubborn inflation has been blamed on housing costs, which economists believe have already come down some and will be reflected in official data in the coming months.

The RentCafe study found California was the worst state for rental affordability for either generation, led by San Jose and San Francisco. Meanwhile, Ann Arbor, Mich., and Bloomington, Ind. were among the cities where homeownership costs were lowest.

Source: https://www.investopedia.com/gen-z-is-paying-more-to-rent-than-millennials-did-at-same-age-8623683