Generation Z On Verge of Becoming Nation’s Largest Tenant Population

The national rental market is about to see a significant tenant change, and it’s all due to people who were born when Bill Clinton was president.

According to a new study released by the Harvard University Joint Center for Housing Studies, Generation Z, or those in the 13 to 27 years of age range, are on the verge of flooding the rental scene.

“Generation Z is now the only generation adding rental households,” says the study, a number that will almost certainly continue to grow as older generations, in particular the Millennials, “are leaving rental units due to homeownership transitions or mortality.”

Officially, Generation Z is comprised of people born between 1997 and 2012, meaning that their current ages range between 11 and 26. It’s the portion of this population that is 18 and above, according to the Harvard study, that is about to become the largest demographic for the nation’s apartment complexes and communities.

“The number of renter households Gen Z adds in the next 15 years will be an important pillar of rental housing demand,” says the report.

And the “extent to which the size of the Gen Z population grows in the next 15 years ultimately could determine whether the number of renter households in the US grows, stabilizes, or declines in the coming years.”

One thing is certain, says the report: “After decades of driving growth, the number of renter households headed by Millennials” has peaked and is now on the way down.

Indeed, continues the report, the Millennials, born between 1981 and 1996, have now reached an age when “more households are transitioning into homeownership rather than forming new rental households.”

At some point during the Great Recession, the Millennials, who up to then had made up a significantly smaller segment of the rental market compared with Generation X and the Baby Boomers, all of a sudden became dominant.

That dominance saw their numbers increase from 14 million households in 2012 to more than 16 million by 2019.

Generation X, during that same period of time, declined from around 13 million to 11 million.

Although a large number of Baby Boomers sold their homes during the Great Recession and re-entered the rental market, their overall numbers declined from just over 10 million rental households to 9 million as of last year.

Market analysts are now trying to get a better feel for what Generation Z wants in terms of their renting and consumer tastes.

According to a Pew Research Center report, members of the Generation Z are “more racially and ethnically diverse than any previous generation, and they are on track to be the most well-educated generation yet.”

The Pew report added: “they are also digital natives who have little or no memory of the world as it existed before smartphones.”

That Generation Z is regarded as a promising rental segment is seen in a survey conducted this summer by the site RealPage, which indicated that a majority of respondents in this age group saw renting an apartment as a better choice than buying a house because of affordability issues.

In fact, according to a New York Times story published in August, more than a third of Generation Z members responding to one survey said they regarded homeownership as “something they think they’ll never be able to achieve.”

Nearly a third of Generation Z, responding to another question, currently live with their parents, “and plan on staying with them as a long-term housing solution.”

By Garry Boulard

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