Renting More Expensive than Home Buying for Generation Z, Study Reveals

A recent study indicates that members of Generation Z, defined as those born between 1994 and 2000, will spend more on rent by the time they reach 30 compared to previous generations. The findings suggest that Generation Z will use about $144,557 on rent, which is $18,000 more than what Millennials, born from 1981 onwards, spent at the same age according to a survey from rental market research site RentCafe. On the brighter side, Generation Z is projected to face lower homeownership costs, estimated at $165,206. This is about $7,000 less than what the Millennial generation paid for a home. Also, Generation Z is expected to outperform Millennials in income, anticipating a 14% higher average income by the age of 30. According to the study, "The favourable conditions for Gen Z are that the difference between the costs of renting and owning a home is smaller than it was for Millennials, whilst incomes are projected to be higher." It's worth noting that both renting and purchasing costs have escalated due to inflation following the economy's recovery from the pandemic. However, economists foresee these housing costs to decrease somewhat and these declines should reflect in official data in the months ahead. In terms of geographical disparities, the RentCafe study highlighted California as the most challenging state for rental affordability for both generations, with San Jose and San Francisco leading. Conversely, Ann Arbor in Michigan, and Bloomington in Indiana were among the cities where homeownership costs were the least expensive.