How the Real Estate Market is Shifting as Gen Z Starts Renting

by Steve Shwetz | May 04, 2016 | Uncategorized

Moving into your own space when you’re young is a definite goal that tends to be a defining factor of adulthood. Many people think that renting a home is reserved for young working adults, typically in their mid to late twenties and some families, while buying is even more exclusive, typically reserved for families and financially established individuals.

However, more and more young people under the age of twenty, defined as Generation Z, are finding they’re able to break into the real estate market whether they are renting or buying, causing an apparent shift in the housing market itself.

Who is Generation Z?

Generation Z refers to the group of people born after the Millennial Generation, or Generation Y. While there are some differing ideas of when Generation Z actually starts, most sources agree that it’s beginning falls either in the mid to late 1990s, or from the early to mid-2000s to the present day. With this said, it is mostly agreed that the oldest members of Generation Z are between the ages of 19 and 21, depending upon when Generation Z starts. Nineteen may seem young to begin renting and buying in the real estate market, but more and more individuals are finding their way into housing, causing the market to shift in some unexpected ways.

What Does Gen Z Making its Way to Real Estate Mean?

According to a survey conducted by Better Homes and Gardens Real Estate, many Generation Z teens (97%, to be exact) desire to and believe they will own a home in their lifetime. In fact, most Generation Z teens indicated that owning a home is one of the more important factors in achieving the ever-evolving American Dream. Since many Generation Z teens would rather buy than rent, this could mean big things for the real estate market.

While renting is a great alternative, homeownership gives the buyer a sense of independence, and in turn, fuels the economy. With more and more Generation Z members keen on making an investment rather than just finding a place to live, they’re more likely to spend money to keep up their living space, thereby sending money into the economy and helping it grow.

Especially if they are planning to “buy local,” Generation Z-ers may be able to singlehandedly boost and even save at-risk communities by keeping money in them.

Typically, older renters (Millennials and above) are all about the here and now, not the future. They want a home that will do for now because they aren’t likely to stay in past their time of need, which means they are also not very likely to invest much time or money in them. This means the money is going elsewhere and not bolstering the community. However, Generation Z may be changing the way we rent as well.

gen z renting

What Do They Look for In Rental Properties?

While the majority of Generation Z-ers have expressed a desire to own a home in their lifetime, they will probably start out renting a space like most young adults do. However, members of Generation Z have also expressed a deep affinity for the suburban lifestyle, meaning they want the home, the marriage, the kids, and even a pet or two. With this in mind, it stands to reason that they are more likely wanting to emulate these desires even in their starter home rental properties. What does this all mean? When it comes to rental properties, Generation Z-ers are most likely looking for the following:

  • Something Affordable: As Generation Z teens have already expressed that they are more than willing to make huge sacrifices to eventually own their own home, it make sense that they would look for an affordable rental property that allows them to save money. If homeownership is the ultimate goal, they are less likely to spend large amounts of money on a rental space if it will not be their final home.
  • A Stable Starter: Generation Z renters are also looking for something stable. In a rental property, they sure to want something they can live in comfortably while they store their money away over time. Something well maintained without too many issues is ideal for most Generation Z renters, however, they are known to make sacrifices, making this criteria rather subjective.

 

Overall, Generation Z is quickly coming on the tails of the Millennials. This impending Generation brings with them the values of the Baby Boomers with the savvy and modern know-how of their Millennial predecessors. As more and more members of Generation Z file into the real estate market, we can continue to see a shift towards affordable rentals and young adults buying homes early on rather than opting to rent continuously. These subtle shifts stand to change the housing market, and the economy for that matter, for the better.

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