Unemployment has prompted millions of young adults to move back in with their parents, according to an analysis of the rental market.
The report, from Zillow.com, shows potential rent lost from Generation Z alone could total an estimated $726 million.
The ripple effects of their next move could have far-reaching consequences for the housing market, the authors concluded.
The number of adults living in a parent’s or grandparent’s home grew by more than 2.7 million in March and April, as the coronavirus pandemic took hold.
That’s nearly triple the largest two-month increase in the past five years. A large majority of those who moved home, about 2.2 million, are between 18 and 25 years old.
In the San Diego metro area, 11.4% of renters are in Gen Z. Those who moved home in March and April represent $12.7 million in monthly rent payments at risk.
The $726 million in rent payments each month comprise about 1.4% of the rental market. If jobs quickly return, housing could rebound. But if jobs are permanently lost or slow to recover, that could free up rental units, driving down prices.
Zillow Senior Principal Economist Skylar Olsen compared the Great Recession’s effect on Millennials a decade ago to what Gen Z now faces.
“But this time, rents are more likely to slow, easing the path to returning to living on their own even if some under-employment persists,” Olsen said.
She added that an increase in apartment construction, and Gen Z opting “to double up or live more affordably in all kinds of ways” will likely slow rises in rent.
If Gen Z’ers opt to stay at home though, they may save enough to move into homeownership quicker, according to Zillow.
Many young people move home during the summer due to college schedules, typically bumping up the share of young adults living with parents by 2-3% from April to July.
It is likely that some college students made that move earlier this year as campuses closed due to COVID-19.
Metros with a higher share of young renters have a greater potential for impact. These include Austin, Kansas City, Cincinnati and Pittsburgh.
Areas with more millennials and older renters, including Miami, New York and Los Angeles, each have less than 1% of the rental market made up of young people who have moved home.
– Staff reports
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