Learn how age plays a role in renters’ decisions, whether they’re planning their next big move or choosing to stay put.
More than half (57%) of single-family home renters* are under age 41 — a few years past the median age of 37 for first-time homebuyers.
Within this massive group of renters, those who decide to continue renting report a host of reasons, ranging from a desire to keep their options open to an affinity for a particular neighborhood to a lack of knowledge or resources to become a homeowner, according to the Zillow Group Consumer Housing Trends Report 2020.
Their reasons for moving also vary but are often tied to market dynamics or life events — a stark contrast to older generations who tend to experience fewer of the kinds of momentous events that can trigger a move, such as graduations, new jobs, marriage, and becoming parents.
Looking at renters through a generational lens can help identify opportunities to better understand customer needs and preferences, especially as the rental world moves increasingly to online transactions.
SOME RENTERS ENJOY THE FLEXIBILITY AND CHOICES AROUND RENTING
The largest group of renters of single-family homes draws from the millennial generation (43%), followed by Gen X (24%), baby boomers (17%) and Gen Z (15%). Only 1% are older than 75.**
Renters of multifamily units also skew younger, with 66% falling under the age of 40. Millennials account for 41% of multifamily renters, followed by Gen Z (19%), baby boomers (15%), Gen X (14%) and silent generation (12%).^
Renters as a whole who plan to move to a different rental within the next year indicate that flexibility and choice are important to them. Asked why they plan to continue renting, 35% say they want the ability to move easily as their life changes, and 30% say that renting suits their lifestyle.
All told, renters across generations hold similar reasons for continuing to rent with a few exceptions. About twice as many Gen Z renters who expect to continue renting say they don’t want to be tied to a mortgage (31% versus 15% of millennials and 16% of Gen X). And those youngest renters also are more likely to say their status as continuous renters is tied to their lack of knowledge about where to buy a home — 28% of Gen Z cite that as a reason versus 20% of millennials, 5% of Gen X and 3% among baby boomers and silent generation renters who cite that reason.
SOME REASONS WHY RENTERS MOVE
While market dynamics often play a role in influencing all generations to move, life events are by far the bigger driver of renter moves, but especially for younger generations who are more likely to experience life changes as they launch into adulthood.
In fact, only 24% of Gen Z and 35% of millennial renters say they are not influenced by either the market or life events, compared to 56% of Gen X renters.
However, housing costs can have a tremendous impact on the choices renters make around major life events, especially for younger renters who are still relatively new to the workforce.
Asked whether the cost of housing ever interrupted or delayed major life decisions such as marriage, cohabitation and retirement, 45% of Gen Z, 42% of millennial, 25% of Gen X, and 20% of baby boomer renters report at least one decision around life planning that was affected.
For Gen Z renters, housing costs are most likely to delay moving in with their partner (25% cite this). For millennials, it’s parenthood — 26% say they delay having children due to the cost of housing.
Housing costs appear to have lesser impacts on the life decisions of renters over 40. The most oft-cited decision Gen X renters say they delay is marriage (13% cite it), while baby boomers and silent generation renters say the event they are most likely to put off is retirement (13%).
RENT INCREASES ARE TIED TO MOVING DECISIONS
Rent increases can be a major trigger in renter decisions to move, according to the report.
Among renters who moved from a previous rental, a majority (72%) report experiencing a rent increase. But younger renters appear to be more sensitive to rent increases than the oldest generations. That may be because they’re more likely to have their rent raised and because the rent hikes they report are higher than those reported by the oldest generations.
Gen Z, millennial and Gen X renters report a typical rent increase of $200 in 2020 compared to $150 for renters age 55 and older. The two youngest generations also are more likely to report receiving a rent hike: a whopping 76% of Gen Z and 75% of millennial renters reported one, compared to 67% of Gen X and 61% of baby boomer and silent generation renters.
Urban and suburban renters skew slightly younger than rural renters, which helps explain why younger renters are more likely to say they experienced a rent hike. Younger renters also are more likely to be people of color, who, even when controlling for urbanicity, are more likely to report experiencing a rent increase.
The higher rent increases experienced by more younger-renter households may be why those renters are more likely to link higher rents to their moving decision: 65% of Gen Z renters and 59% of millennials say their higher rent greatly or somewhat impacted their move.
Rent increases also may help explain, in part, why a higher share of young renters say they have homebuying on their mind: 64% of Gen Z, 61% of millennial, and 51% of Gen X renters consider buying a home compared to 29% of baby boomer and silent generation renters.
Overall, about 1 in 4 renters from each generation say higher rent influenced their moving decision to a great extent.
RENTERS WANT REMOTE PAYMENTS, SHARED AMENITIES
Remote technologies for finding rentals and paying rent grew more popular in 2020, and are likely to become more widely adopted as younger renters enter the market.
Not surprisingly, younger renters — who are likely to be fluent in technologies of all kinds — show a greater preference than older renters for online rent payments. More than half (51%) of Gen Z and 46% of millennials reported paying online compared to 37% of Gen X and 31% of baby boomer and silent generation renters.
But a majority of all renters — 69% — want the ability to pay online. A Zillow survey in October 2020 found that: 63% of Gen Z, 74% of millennials, and 71% of Gen X renters say online is their ideal form of payment. Older generations are the most likely to prefer face-to-face interactions, but even 61% of those renters say they would like to pay rent online.
Amenities such as fitness centers, rooftop decks, pet areas, and conference rooms are more likely to be highly important for younger renters than for older renters, who are more likely to place greater importance on storage and staying within budget.
The distinction is particularly evident when it comes to the luxury amenities, including the following features that younger renters say are extremely or very important to them:
- Smart home capabilities – 20% of Gen Z renters and 17% of millennial renters rate them very or extremely important compared to only 6% of baby boomer and silent generation renters.
- Shared fitness center or gym – 31% of Gen Z and 24% of millennial renters, compared to 16% of Gen X and 13% of boomer and silent generation renters.
- A rooftop deck or garden – 21% of Gen Z and 20% of millennial renters compared to 9% of boomer and silent generation renters.
- Other shared amenities such as a pet area, business center or conference room – 27% of Gen Z and 21% of millennial renters compared to 13% of boomer and silent generation renters
- Remain open to new technologies and processes to attract the broadest demographic of renters.
- While different generations show certain preferences for amenities and technology, the best way to determine what works best for your renter is to ask them. If paying in person is what makes your renter feel more confident, find a way to make that monthly connection with them.
- To reduce turnover, consider the role that rent increases can play in decisions to move.
- Recognize that renters as a group tend to move a lot depending on what’s happening in their lives. You can be a great landlord and still lose a good tenant to life’s events.
* Gen Z: 18-25 years old. Millennials: 26-40 years old. Gen X: 41-55 years old. Baby boomers: 56-75 years old. Silent generation: 76 and up.
** Renters are defined as household decision-makers who moved in the past year and rent their primary residence.
^ Multifamily data is from the US Census Bureau, American Community Survey 2018.
NATIONAL ASSOCIATION OF RESIDENTIAL PROPERTY MANAGERS Residential Resource – May 2021 Issue | Volume 32 | Number 5