The upper edge of the Gen Z age cohort (those born between 1997 and 2012) has entered adulthood and the job market. A report by RentCafe about these older Gen Z adults explained a couple of things:
Gen Z will spend $145,000 on rent by their 30th birthday; millennials spent $127,000 during the same stage of their lives
Homeownership presents a sizeable financial challenge to Gen Z, as it did for millennials in their late 20s
“In nearly all the 200 U.S. metros we looked at – 98.5% of them – renting is the better option for Gen Zers younger than 30,” report author and RentCafe research analyst Alexandra Both told Connect CRE. “For Zoomers, renting costs are lower than owning costs, even though we left the down payment out.”
Both added that the numbers show that homeownership by age 30 isn’t attainable for most in the Gen Z age cohort, at least not without support from family members. “They need at least a decade of planning and maybe saving to seriously consider homebuying,” she added.
Yes, Geography Matters
It should probably come as no surprise that renter life in regions like the San Francisco Bay Area, Boston and Honolulu is costly, with Zoomer renters spending $234,625 (Boston), $286,697 (San Francisco) and $241,028 (Honolulu) by the time they reach age 30. Other high-rent areas include:
Washington, DC – $212,257
New York City — $226,230
Los Angeles — $221,754
Also unsurprising is that Zoomers living in California pay the most rent by the time they reach 30 – upwards of $300,000 in areas like San Jose.
At the other end of the spectrum is:
Goldboro, NC — $96,951
Jacksonville, FL — $137,123
Waco, TX — $109,345
Nashville, TN — $149,322
Both explained that this highlights the eternal dilemma: Staying in a city with limited job growth and affordable housing or living in a region that has more significant job potential but the likelihood that homeownership is delayed.
But there are what she called “hidden gems,” areas offering professional opportunities and a shorter path between renting and homeowner status for Gen Zers. “Our study shows that the cost of owning a home – down payment excluded – in places like Grand Rapids, MI, Charlotte, NC or Waco, TX are just slightly higher than renting.” Ann Arbor, MI, which is becoming a dynamic tech hub, is a city where it’s less expensive by $21,000 to own rather than rent for Zoomers, she added.
The Message to Multifamily Owners and Managers
The report explained that Gen Z is known as “the most diverse and potentially the best-educated group in American history,” meaning they also are the highest income earners. Both added that this savvy generation knows exactly what they want. She said they want things to happen immediately and prize convenience.
“For example, 78% of Gen Zers named online rent payments and maintenance requests as the top digital features they want as renters,” Goth explained, adding that 75% of those surveyed said their phone is the most-used device. “Property managers need to prioritize a strong online presence optimized for mobile users,” Both suggested. “This allows Zoomer renters to use their phones to search for apartments, send applications, pay rent or make maintenance requests.”
Other aspects that owners and managers should consider:
Stress online promotions. Marketing and ads should be short and dynamic. “Virtual tours, interactive 360 property maps and videos are just a few tools multifamily owners and property managers can use to attract Gen Zers,” Both said.
Ratings matter. According to Reach (a RentCafe sister company), more than 60% of Zoomers consider ratings and reviews “most of the time” in their online apartment searches. Word of mouth doesn’t work with his age cohort. “Multifamily owners and property managers should be sure to offer property reviews; Gen Zers will match the property’s offline reputation with an online one,” Both pointed out.
This is an active generation. Both explained that Zoomers spend a lot of time on sports activities compared to previous generations. Plus, they’re more interested in sleeping, self-care and social events. “Property managers need to consider what type of amenities can cater to the lifestyle of these young adults as part of their resident experience,” Both said, adding that amenities encouraging well-being and a healthy social life are preferable to Zoomers.
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