Housing is a basic necessity that involves a lot of decision-making, such as whether to rent an apartment or buy a home. The right answer varies from one household to another, but when it comes to Millennials and Gen Z’ers, this decision becomes even more muddled.
Millennials (or Gen Y) are the generation born roughly between 1981 and 1996 (plus or minus a few years), while Gen Z was born approximately between 1997 to 2012. The oldest Millennials are now 41, while the youngest Gen Z’er is 10. For the population of these groups, the outlook for renting versus owning is not good.
According to a 2018 HotPads report, Gen Z will spend an average of $226K on rent in their lifetime. That adds up to $77K more than what the average Baby Boomer spent. This is a huge problem, especially considering raises in rental costs currently exceed pre-pandemic levels and outpace wage growth.
As a result, this perfect storm pushed many Millennials and Gen Z’ers out of the housing market, forcing them to rent for longer. On the other hand, many people in these age groups enjoy a lifestyle that doesn’t fit with owning and maintaining a home, and, therefore, they choose to rent long-term. Either way, the amount of time these generations rent for is lengthening.
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Why Aren’t Millennials Buying Homes?
Despite the increase of people choosing to rent, the dark side behind why so many people rent for longer still lingers — necessity. Houses are more expensive now than ever. The Case-Schiller Index shows that housing costs rose by 18.6% over 12 months in 2021, the largest jump in the index’s history, and forecasts indicate further, though less steep, increases for the next few years.
Housing costs remain high for many reasons. Demand for family dwellings rose as Millenials aged into the market, but the available stock did not. Zoning laws and rising construction costs caused the manufacturing of new homes to dwindle behind demand. In addition, corporations are purchasing homes and flipping or renting them for profit, further driving up prices.
Even if an adequate supply of houses landed on the market this year, many Millennials and members of Gen Z would either not want or be able to pay for them. According to Rocket Homes, Gen Z’ers said they expected to pay $223,468 for their first home. That’s almost 40% below the actual median home value at the time of the survey. Add to that disconnect between expectation and reality the fact that 21.9% expect to struggle to make a down payment.
Rising inflation and lack of savings due to debt and low wages hamper these generations’ ability to save for down payments, taxes, and closing costs. No, Netflix subscriptions and Starbucks do not account for this lack of savings. Rather, student loan debt (14.8 million Millennials have student loan debt, more than any previous generation), medical debt (25% of Gen Z and 23% of Millennials have skipped paying rent in favor of paying medical bills), and wage increases that hover at an all-time low compared to inflation, means that younger generations are being pushed out of an increasingly expensive market.
More People Renting Because They Want to
Despite the stark realities many Millenials and Gen Z’ers face, a subset of these generations actively choose to rent for longer, and they are slowly shifting our culture away from home ownership as a key indicator of an individual’s success. And, it’s true that renting comes with many benefits. Younger generations looking to live in downtown areas or near popular nightlife and amenities may find renting to be the less expensive, or perhaps only, option in these areas.
Younger generations might also still be figuring out their careers, which could mean moving to new cities or states early in their adulthood in order to land a job at the right company. Renting an apartment makes it easier to move than selling one house and buying another.
Some people also love to travel and may desire the flexible lifestyle that comes from renting. In an apartment, you don’t need to stick around to mow the grass or deal with the upkeep that comes with owning a home. If a pipe breaks or the fridge goes out, you just call maintenance, and it gets fixed. In terms of upkeep, smaller spaces are also easier to keep clean.
What Millennials & Gen Z Look for When Renting
Since Millennials and Gen Z will rent longer, they maintain some exacting standards by which they judge their future apartments. Here’s what Millennials and Gen Z tend to expect from their rental homes:
Everyone wants to live in the right location. For Millennials and Gen Z, a good location means living close to work and amenities, such as groceries and nightlife. Up to 55% of Millennials say they want to drive less. A convenient commute via walking, bicycle, or public transportation can determine their ideal apartment location.
Millennials and Gen Z want spacious apartments that don’t feel like the cramped dorm rooms they lived in not so long ago. Space matters for working from home, exercising, hosting friendly gatherings, and—for the 55% of Millennials living with partners and/or kids — getting away for alone time.
Unsurprisingly, people want to feel safe in their homes. In apartment buildings, this may mean using key-carded entrances, parking lot gates, and security cameras to ensure resident safety. Renting in safer neighborhoods is also critical and speaks back to wanting the right location.
Pro tip: Keep in mind that fair housing laws limit the ways in which leasing and real estate agents can discuss safety. They might not be able to answer all of your questions fully, so prepare ahead of time with some research on your preferred neighborhoods.
As renters, Millennials and Gen Z must deal with apartment management companies for rent questions & payment, maintenance requests, access to amenities, and more. Relying on a management company that responds quickly and takes care of problems expediently ranks high on their wishlist.
Energy costs along with everything else are on the rise, and global warming seems to speed up daily. Millennials and Gen Z want a healthier future that costs less; thus, energy-efficient and conservation-friendly buildings attract them.
If Millennials and Gen Z are going to spend so much on rent, they want the latest upgrades and appliances. Shag carpet, popcorn ceilings, and appliances older than their parents won’t inspire them to sign that lease.
In the digital age, everyone desires to stay connected. Whether they demand high-speed internet, or a good cell phone connection, Millennials and Gen Z want easy connectivity for communication and work.
More than 76% of Millennials own a cat or dog. Pet ownership also increased during the pandemic, and with younger folks getting married later, they need more mental health support than previous generations. Pets make the perfect companions, and these generations will look for pet-friendly buildings.
Adding to the space of their actual apartment, Millennials and Gen Z want outdoor spaces and amenities. Pools, rooftop hangouts, dog parks, and access to outdoor areas for recreation and working out can make all the difference in their choice of apartment building.
Need Help Finding Your Next Place to Rent?
If renting is a necessity for many people, then apartment locating services are also a necessity. That’s where AptAmigo comes in. We’ve been around since 2015, helping renters find their perfect apartment at their perfect price. Experience award-winning, concierge apartment locating services when you call AptAmigo today.