Gen-Z is in the renter's seat

Daily Data: Gen-Z is driving growth in the rental market, and their lifestyle choices suggest big changes are afoot

Demographics and lifestyle choices matter a lot to the demand for housing.

Don’t believe me? See for yourself.

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Daily Data

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Gen-Z is in the renter’s seat

Random Walk has written often on the relationship between demographics and the housing market.

There’s probably more than one “gist” to choose from, but for present purposes, the gist of it is as follows:

• a declining and/or flat population

• that marries less-frequently, later-in-life, and with fewer children,

• is going to demand a different mix of housing than the generations that came before it.

Pretty straightforward.

One implication is that we may not have a “Housing Shortage,” so much as an inventory misallocation, and that aging empty-nesters may not have as many takers for their palatial single-family estates as they might have thought.

Anyways, that’s what might happen.

What about what is happening?

There’s some data that suggests these generational demographic shifts are already shaping the housing market.

If they accelerate, and there is a good change that they will, the change could be profound.

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Rental growth is driven by Gen-Z

The first observation is that Gen-Z is now driving the rental market.

It’s the only generation still increasing the number of renter households, after Millennials ended a ~20 year growth run in 2019:

Gen-Z drives rental growth alone

Presumably rental growth for Millennials will continue to decline, similar to older generations before it.

Why does it matter?

It matters as a signal for what happens next.