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Apartment Rental Rentals: Which generation of tenants is most affected by high prices? - La Nacion Propieddes

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Rentals: Which generation of tenants is most affected by high prices? - La Nacion Propiedades
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December 10, 2024


An analysis of Census Bureau data found that while Gen Z definitely has a rental burden, millennials may have had it worse

By Matt Yan



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Millennials and Generation Z prefer the home officePixabay



Earlier this year, The New York Times reported that Gen Zers (people born after 1997) have become the generation driving the most demand for rentals , replacing millennials (those born between 1981 and 1996), who are slowly making the transition to homeownership. You might think, given the post-pandemic housing crisis in the United States , that Zoomers would also be more burdened by rent 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 2022 American Community Survey and found that nearly half of all American renting households were burdened by rental costs , “with Gen Z renters bearing the heaviest burden .”



But while 58.6% of Gen Z renters nationwide were rent burdened in 2022 , 60.2% of millennials experienced rent burden at the same age in 2012 . The report defined “rent burden” as spending more than 30% of income on housing expenses. It compared renters ages 18 to 25 in 2012 and 2022, excluding renters who were not working.





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Generation Z is overwhelmed by paying rent Shutterstock - Shutterstock

While more recent data was not available, the comparison is notable because the U.S. housing shortage “has only gotten worse,” said Kenny Lee, a senior economist at Zillow and StreetEasy. As of 2022, there were about 5.2 million Gen Z households renting in the U.S. With a median annual gross rent of $16,980 and a median annual gross income of $42,000, they were spending about 40% of their income on rent .

“Low inventory really makes it difficult for local housing markets to find a balance between supply and demand,” Lee said. “That puts a bigger burden on young adults , who often have lower incomes because they’re still early in their careers.”



But while the pandemic put a wrench in Gen Z renters’ lives , it wasn’t as severe as the housing crash of 2008 and 2009. Lee said the share of young adults burdened by rent peaked in 2011 , at 62% . The following year, 60.2% of millennials were still spending more than 30% of their income on rent, but it gradually declined from there, to 55% in 2019. It rose again as surging demand after the pandemic, coupled with decades of insufficient supply, “ led to sharp rent increases across the country ,” the report said.





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The proportion of young adults burdened by rent peaked in 2011

As always, the numbers vary by region , even within states. The share of renters experiencing rent burdens in Austin , Texas, fell 9.6% between 2012 and 2022 , while in Houston it rose 11.9% . And in California , some Gen Z renters were more rent-burdened in 2022 than millennials, with three cities topping the national list : San Diego , where 73.4% of Gen Z renters were rent-burdened, followed by Los Angeles (71.7%) and Sacramento (71%).


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Gen Z seems doomed. All I know about it is my sister's daughter. She is in constant depression because she got rejected from many schools she applied to for college and now is in a funk. She goes from job to job after graduating from college. She has moved back in with my sister. What happened to this generation?
 
As always, the numbers vary by region , even within states. The share of renters experiencing rent burdens in Austin , Texas, fell 9.6% between 2012 and 2022 , while in Houston it rose 11.9% . And in California , some Gen Z renters were more rent-burdened in 2022 than millennials, with three cities topping the national list : San Diego , where 73.4% of Gen Z renters were rent-burdened, followed by Los Angeles (71.7%) and Sacramento (71%).
Pricers at least in Texas are falling. The prices in Austin seem like they are falling quite a bit now. We got a lot of people from California moving to Texas before and after covid but I think many must be moving out. My friend in Austin is trying to sell her place and she said prices keep falling.

Not sure how people make it in California! I went to San Diego and Orange County to visit my brother and wow is it beautiful there but crazy expensive.

Betsy I think Gen Z are a bunch of whiny complainers. Most that I know are always complaining about one thing or another.
 
Gen Z seems doomed. All I know about it is my sister's daughter. She is in constant depression because she got rejected from many schools she applied to for college and now is in a funk. She goes from job to job after graduating from college. She has moved back in with my sister. What happened to this generation?
I see a lot of this same thing Betsy. I have some neighbors that had their daughters graduate from very good Universities and they moved back in with their parents and have dead end jobs. It's strange to me to see 25-30 year olds living at home with their parents after spending quality money on University degrees at good schools. I honestly think Gen Z is mostly cooked. I see a lot of friends kids that are constantly complaining. Don't really want to stick with any job for any amount of time. Have no desire to have kids, only own a dog or cat. Don't aspire to get married and many living at home with their parents even in adulthood.

That really seems strange to me. I guess these people are fortunate that they have their parents to fall back on. Honestly, I wouldn't want my kids to move back in with me once they are graduated from college and probably wouldn't allow it. I think parents need to provide some tough love to their kids instead of coddling them.

If you get a chance Betsy check out this excellent article from Business Week Magazine.

The ghosted generation



 
Pricers at least in Texas are falling. The prices in Austin seem like they are falling quite a bit now. We got a lot of people from California moving to Texas before and after covid but I think many must be moving out. My friend in Austin is trying to sell her place and she said prices keep falling.

Not sure how people make it in California! I went to San Diego and Orange County to visit my brother and wow is it beautiful there but crazy expensive.

Betsy I think Gen Z are a bunch of whiny complainers. Most that I know are always complaining about one thing or another.
Tons and tons of people from California moved to Texas as many companies relocated to Texas from California. I heard prices were falling a bit in Austin but I'm not sure how much. @CraigM lives there so would be curious to hear from him. Some friends told me it's fallen about 5% from last year? Probably longer term it will do fine. In inflationary environments, I like real estate.

Very true about California, especially San Diego. It's ranked as the USA's most expensive city now. Very very beautiful but cost of living is brutal.
 
I see a lot of this same thing Betsy. I have some neighbors that had their daughters graduate from very good Universities and they moved back in with their parents and have dead end jobs. It's strange to me to see 25-30 year olds living at home with their parents after spending quality money on University degrees at good schools. I honestly think Gen Z is mostly cooked. I see a lot of friends kids that are constantly complaining. Don't really want to stick with any job for any amount of time. Have no desire to have kids, only own a dog or cat. Don't aspire to get married and many living at home with their parents even in adulthood.

That really seems strange to me. I guess these people are fortunate that they have their parents to fall back on. Honestly, I wouldn't want my kids to move back in with me once they are graduated from college and probably wouldn't allow it. I think parents need to provide some tough love to their kids instead of coddling them.

If you get a chance Betsy check out this excellent article from Business Week Magazine.

The ghosted generation



It's nice to have a different culture in BA where the kids stay at home until they are older. I don't have any problem with my kids staying and living with us IF they have a steady job. I don't want them just goofing around after they have a degree. Odds are I will probably send them off to the US for their college education. I'm not sure how desirable a local degree will be abroad. They already said they want to work outside of Argentina. Not too many promising jobs here compared to back home.
 
Tons and tons of people from California moved to Texas as many companies relocated to Texas from California. I heard prices were falling a bit in Austin but I'm not sure how much. @CraigM lives there so would be curious to hear from him. Some friends told me it's fallen about 5% from last year? Probably longer term it will do fine. In inflationary environments, I like real estate.

Very true about California, especially San Diego. It's ranked as the USA's most expensive city now. Very very beautiful but cost of living is brutal.
They've definitely fallen, in my area I would guess 25-30% from the peak in 2022. But that was a pretty nutty peak where Californians were door-knocking with offers. I'm not a real estate expert but seems the market is simply adjusting to fundamentals like real incomes and much higher mortgage rates, which is healthy. Prices are still much higher than pre-Covid.

I'm told rents have fallen even more because of so much new supply, and more coming on with high rises downtown still being finished. Our uber driver this week said he's in a nice 1br in a fairly new complex on S. Congress for $1100 a month, that is a steal compared to a few years ago.
 
They've definitely fallen, in my area I would guess 25-30% from the peak in 2022. But that was a pretty nutty peak where Californians were door-knocking with offers. I'm not a real estate expert but seems the market is simply adjusting to fundamentals like real incomes and much higher mortgage rates, which is healthy. Prices are still much higher than pre-Covid.

I'm told rents have fallen even more because of so much new supply, and more coming on with high rises downtown still being finished. Our uber driver this week said he's in a nice 1br in a fairly new complex on S. Congress for $1100 a month, that is a steal compared to a few years ago.
Wow I did not think prices jumped up so much and then crashed so hard so fast in the US. 2022 was only 3 years ago. To fall 30% from peak is something like we experienced in Buenos Aires. My apartment jumped up in value and I also sold in 2018. Then it crashed very hard in the last years up to 2023. Now it is going back up but far from what I got appraised in 2018. Now I will wait to sell as prices seem to be going up now.
 
They've definitely fallen, in my area I would guess 25-30% from the peak in 2022. But that was a pretty nutty peak where Californians were door-knocking with offers. I'm not a real estate expert but seems the market is simply adjusting to fundamentals like real incomes and much higher mortgage rates, which is healthy. Prices are still much higher than pre-Covid.

I'm told rents have fallen even more because of so much new supply, and more coming on with high rises downtown still being finished. Our uber driver this week said he's in a nice 1br in a fairly new complex on S. Congress for $1100 a month, that is a steal compared to a few years ago.
My sister lives in Santa Barbara and her neighbor moved to Texas right after Covid. They bought right around those peak times in Austin and what she told me matched what you mentioned Craig. They stayed a few years but recently sold their Austin home to move back to California because they missed the weather and lifestyle. She said that they lost a considerable amount of money between moving expenses, price crashing and also real estate commissions. Also their house in Santa Barbara continued to go up in value during those years.

It seems like many people will not want to move from their current houses. Most friends that I know got 2.25% to 3% mortgages locked in or refinanced several years ago. Those people aren't going anywhere.
 
Wow I did not think prices jumped up so much and then crashed so hard so fast in the US. 2022 was only 3 years ago. To fall 30% from peak is something like we experienced in Buenos Aires. My apartment jumped up in value and I also sold in 2018. Then it crashed very hard in the last years up to 2023. Now it is going back up but far from what I got appraised in 2018. Now I will wait to sell as prices seem to be going up now.
It was a very isolated case where huge numbers of Californians moved to Austin during Covid, and it's a relatively small city so prices went ballistic. Someone offered to buy our house for 4.5x what we paid for it 10 years earlier. Fundamentals didn't matter anymore, but eventually they do and we're going through that adjustment.
 
It was a very isolated case where huge numbers of Californians moved to Austin during Covid, and it's a relatively small city so prices went ballistic. Someone offered to buy our house for 4.5x what we paid for it 10 years earlier. Fundamentals didn't matter anymore, but eventually they do and we're going through that adjustment.
Wow! 4.5 times. Did you get tempted? I am sure you did! I don't think as much as I loved my house I could pass up if someone paid that much so shortly after I bought it. Do you regret not selling?
 
It was a very isolated case where huge numbers of Californians moved to Austin during Covid, and it's a relatively small city so prices went ballistic. Someone offered to buy our house for 4.5x what we paid for it 10 years earlier. Fundamentals didn't matter anymore, but eventually they do and we're going through that adjustment.
COVID was definitely strange times. It's hard to believe we went through all of that. The same thing happened in my neighborhood. We had many people from the San Francisco Bay Area flocking to my community. Daily during COVID we would have letters and phone calls from realtors and even potential buyers that were making unsolicited offers to ALL of my neighbors. Several jumped at the chance to sell at very high prices. Someone offered me 3.5x what I paid for my house at the time also 10 years earlier. Although we own several properties outside of the USA, which we visited during COVID, I couldn't think of a better place to be during COVID than my house.

Fortunately here in Southern California, prices keep going up. They dipped a little but then they just keep going up. We are very fortunate that we live about 5 miles from the beach and it's a great community. What I'm seeing is many foreigners from all over the world are not moving into the community. Lots of affluent people from Latin America, Europe and also Asians. The school district is one of the best in the country so many people move here for the great schools.

The salaries are not too high in San Diego. We have the "sunshine tax" so employers don't have to pay much but fundamentals don't really matter much if all the people moving in are wealthy and it doesn't matter what things are like on a local level if you have enough buyers moving in that are willing to pay more.
 
They've definitely fallen, in my area I would guess 25-30% from the peak in 2022. But that was a pretty nutty peak where Californians were door-knocking with offers. I'm not a real estate expert but seems the market is simply adjusting to fundamentals like real incomes and much higher mortgage rates, which is healthy. Prices are still much higher than pre-Covid.

I'm told rents have fallen even more because of so much new supply, and more coming on with high rises downtown still being finished. Our uber driver this week said he's in a nice 1br in a fairly new complex on S. Congress for $1100 a month, that is a steal compared to a few years ago.
Craig did people sell and move out? Or people just stopped moving to Austin? It sounds like people were just overpaying for properties. If they were from California and moving to Austin property prices are much higher so they probably seemed cheap.

We looked at some properties in Texas. It is great that there is no state income tax there but the annual property taxes were very high!
 
Craig did people sell and move out? Or people just stopped moving to Austin? It sounds like people were just overpaying for properties. If they were from California and moving to Austin property prices are much higher so they probably seemed cheap.

We looked at some properties in Texas. It is great that there is no state income tax there but the annual property taxes were very high!
I wasn't tempted because with a family you have to think about what's next, and there were lots of taxes and fees to consider. A few people I know got really crazy offers and it made sense for them to sell, but most people stayed put for the same reasons we did.
 
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