More young adults are being motivated by concessions and good deals to return to the rental market, according to new research from Zillow.
More than a third, or 34%, of Generation Z renters, aged 18 to 25, who moved in the past year said they moved from a home of a family member or a friend. That’s up from 20% who reported the same in April. It’s also consistent with Zillow’s findings in September that the number of young adults living with family members had started to decline from the dramatic rise seen in the spring due to the COVID-19 pandemic.
For those Gen Z renters moving from a previous rental to a new one within the past year, more than half, or 51%, said they are paying more than before, and 14% reported paying the same. However, 57% of young adults cited finding a better deal on rent as the reason for moving. According to Zillow, nationwide rent was up 0.9% in September, but lower year over year in seven major markets, including Austin, Texas, and Chicago.
“What we’re seeing is that renters who might have been in a small apartment are instead looking at larger units—maybe a two-bedroom instead of a one-bedroom,” said Zillow Premier Agent Kenny Truong, founder of Fast Real Estate in the San Francisco Bay Area. “Some others are moving to a rental with a view or a yard for a similar price.”
Zillow also found that nearly half of the young adult renters, 49%, were motivated to move because their new rental offered promotions or concessions, such as a free month of rent, free parking, or a reduced security deposit.
Concessions rose from 16% to 30% between January and August, but they have stabilized at around 34% nationwide in October, with some exceptions. More than half of rental listings in Charlotte, North Carolina; San Jose, California; and Washington, D.C., offered some kind of concession in October.
Concessions in six large markets—Boston, Chicago, Indianapolis, New York, Philadelphia, and Washington, D.C.—amount to savings equal to two months of free rent with a year-long lease. The 50 largest markets had a minimum median savings rate at 8.3% or higher.
“The effective savings rate is what renters would save on their typical housing costs over the course of their lease because of both lower rent prices and concessions,” said Zillow economist Joshua Clark. “Those savings could be enough to cover the cost difference between a one-bedroom and a two-bedroom unit. Plus, if these Gen Z renters who moved home retained their jobs through the pandemic, they’ve likely saved enough to afford a larger or more desirable apartment.”
The return of Gen Z renters to the market also is reflected in the increase in demand for digital rental tools, like virtual tours. According to the recent Zillow survey, renters were more likely to agree that 3D and unassisted technology would aid in their home search compared with the findings in April. More than six out of 10 Gen Z renters who moved in the past year reported wanting more listings offering 3D tours and agreed that those tours would give them a better sense of the space than static photos.
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