HOUSTON – (By Dale King, Realty News Report) – The surge in COVID-19-related unemployment across the United States has forced millions of young adults to move back in with their parents.
A survey by real estate website Zillow estimates the potential rent loss from Generation Z alone—those born in 1997 or later and raised entirely in the digital age—could total about $726 million nationwide. In the four major Texas metros—Dallas/Fort Worth, Houston, Austin and San Antonio—landlords could lose more than $46 million combined.
“The share of adults living with their parents has been high since the [2008–2009] financial crisis,” said Zillow Senior Principal Economist Skylar Olsen. “Then, it was Millennials returning to basements and spare bedrooms of their Baby Boomer parents, and many remained there as rent burdens rose.”
“Now, it’s Gen Z’s turn to weather today’s crisis amid massive unemployment. But this time, rents are more likely to slow, which could make it easier for some to return to independent living even if under-employment continues,” Olsen added.
The oldest members of Gen Z are about 23 years old—many finishing college and starting careers. Texas is particularly exposed, Zillow notes, because Dallas/Fort Worth, Houston, Austin and San Antonio each host relatively large Gen Z populations.
Nationwide, renters who are part of Generation Z account for roughly 13.2% of the renter population. If a significant share of them move back home, the rental market could face an estimated $726 million in lost rent.
The report clarifies that this figure represents a theoretical maximum. “It is highly unlikely that all leases will be broken, and this full amount would go unpaid,” Zillow notes, “but it serves as a gauge of the potential impact on housing.”
For Texas, Zillow’s breakdown is:
- Houston: 11.2% of renters are Generation Z. If they move home, the local rental market could lose approximately $13,318,544.
- Dallas/Fort Worth: 13.3% of renters are Gen Z. Relocating back to family homes could cost the rental market about $18,969,375.
- Austin: Nearly one in five renters (18.3%) is Gen Z. If many move in with parents for more than a short period, the rental market could lose just over $9 million.
- San Antonio: With 12.1% of renters in Generation Z, the rental market could be deprived of roughly $4.7 million if these renters remain at home.
Olsen cautioned that the market’s trajectory depends on how employment recovers. “If jobs return quickly to pre-pandemic levels, the housing status quo could rebound as these renters resume independent living. But if jobs are permanently lost or recover more slowly than expected, many rental units could be freed up and put downward pressure on prices.”
Previous Zillow research found renters in some industries hit hard by coronavirus-related layoffs were already struggling financially before the pandemic.
“Some young people may welcome the breathing room living with parents can provide, especially if they can stay rent-free, and choose to stay even after employment returns. That could help Gen Z save for a down payment and move into homeownership sooner, or it could delay parents from downsizing while a child remains at home,” Olsen said.
Young adults tend to move more frequently than older age groups because they often have less stable employment and smaller savings. Many also move home seasonally for college, typically increasing the share living with parents by 2–3 percentage points from April to July.
“Some college students likely moved home earlier this year when campuses closed due to COVID-19, contributing to the April jump. But far more young people were living with parents in April than during a typical summer peak, indicating that the usual seasonal shift was amplified by soaring unemployment,” Olsen observed.
Zillow’s report points out that metros with a higher share of young renters—such as Austin, Kansas City, Cincinnati and Pittsburgh—face greater potential impacts. Markets with more Millennials and older renters, including Miami, New York and Los Angeles, appear somewhat more resilient. While it’s unlikely all leases will be broken, the figures provide a useful gauge of how the rental market could be affected.
June 15, 2020 Realty News Report Copyright 2020