If you’re between the ages of 18 and 25 and feel you’re paying an exorbitant amount on rent, you’re not imagining things, and you’re definitely not the only one! Three in five renters in the United States are considered “rent-burdened” according to a new study from StreetEasy. Those who are rent-burdened spend more than a third of their salary towards rent. And unfortunately, Los Angeles has the second highest percentage of rent-burdened Gen Z renters.
Why are Gen Z facing such a challenging rental market?
Sadly, since 2019, rental prices have grown 1.5x faster than wages across the United States, according to a recent statistical analysis by StreetEasy and Zillow. And even though wages have risen as well since the pandemic, an ever-growing demand for rentals and limited availability has led to this discrepancy. Due to these troubling economic factors, 58.2% of adult Gen Z renters in the U.S. spend more than 30% of their income on housing costs. This new data comes from the U.S. Census Bureau’s American Community Survey (ACS).
Which U.S. cities have the highest rent-burdens?
Sadly, at least half of Gen Z renters are rent-burdened in each of the 30 largest metro areas throughout the United States. Even sadder, California is home to the nation’s highest shares of rent-burdened Gen Z-ers. San Diego and Los Angeles were the two metro areas with the highest rent-burdened percentage, with San Diego at 73.4% and L.A. at 71.7%. And Sacramento came in a close third at 71%.
Why is there a housing affordability crisis?
The current housing affordability crisis is due to a growing housing shortage across the country. According to Zillow analysis, the housing deficit in the United States rose to 4.5 million in 2022. And this number is an increase from the 4.3 million deficit in 2021. Additionally, housing shortages are even more severe on the nation’s coastal cities, with L.A. obviously being greatly affected.
Why are more people renting now rather than buying homes?
According to StreetEasy, “High rent burdens exacerbate housing instability and make it challenging to build wealth for long-term financial goals.” Additionally, all of these extra monthly costs add up and prevent the growth of savings accounts. Saving for a down payment for a house has become nearly impossible, and it prevents many young adults from being becoming homeowners which would allow them to build equity and generational wealth.
You can read the full findings of the study here to learn more about the methodology and data collected.