Gen Zers are the new millennials—Americans in their late teens, 20s, and early 30s—who traditionally comprise the largest renter demographic in the country. However, stubbornly high housing costs and supply issues have made the once-seamless transition from renter to owner more complicated, pushing more young Americans to rent longer and making rents harder to afford. This has had a dramatic influence on where Gen Zs live and work.
According to a new report from RentCafe.com, Gen Z has dramatically increased its footprint in the U.S. rental population, from 700,000 five years ago to 4.4 million today. The Wall Street Journal quotes Zillow as saying that 25% of all U.S. renters and 47% of recent renters were Gen Zers, as of May 2025.
However, they have stepped into a perilous housing market. A recent Redfin survey found that 67% of Gen Z respondents reported struggling to afford their rent or mortgage, compared with just over half of millennials and about 36% of baby boomers. Selling belongings, working side hustles, and moving in with their parents have been Gen Zers’ financial coping mechanisms.
Asad Khan, a senior economist at Redfin, said in a statement:
“The reality is that with housing costs still historically high, many young Americans are making compromises on location, size, or timing to get their foot in the homeownership door and start building equity. Gen Zers and millennials are making small gains in homeownership because they’re eager to buy, they’re making sacrifices, and because affordability has improved a bit at the margins—not because homes suddenly became affordable. We expect the slow progress to continue this year, with housing costs dipping slightly while wages rise.”
Where Gen Z Rents and What They Look For
Gen Z renters are located anywhere they can find good jobs and rising wages, according to the RentCafe.com report. Gen Zers are not monolithic, nor are the locations they choose to settle, from pricey coastal cities and tech hubs to less expensive, burgeoning, smaller Southern cities.
For those who can afford it, high-design, amenity-rich apartment buildings functioning as self-contained communities are high on the list, reported the Wall Street Journal. For those who can’t afford it, lower monthly rents and short commutes are high on the list of Gen Z priorities, according to the RentCafe.com report, which states that wage growth makes renting a more viable financial option for many Gen Zers, especially those with good jobs in California’s Silicon Valley, where 95% of Gen Zers who live there rent.
“Gen Z prefers renting in pricey markets like New York City and Los Angeles for the flexibility it offers, and many don’t mind smaller apartments if it means living close to everything,” Adina Dragos, RentCafe.com writer and research analyst, wrote in the report. “Social media adds to the appeal as the ‘fear of missing out’ (FOMO) makes living there feel like an important and shareable life experience.”
Mostly, however, Gen Zers want affordability, good schools, and outdoor activities, which is leading many to the South. Birmingham, Alabama, is ranked as the metro area with the fastest-growing population of younger American renters, increasing by 13 times in just five years. Affordability means that a third of the Gen Z population is able to own here.
According to RentCafe.com data, Huntsville attracts young professionals for similar reasons. Ranking second, however, is a Southern city that has been on most people’s radars for a while: Raleigh, North Carolina, a college town where nine out of 10 Gen Zers rent and which offers a vibrant, well-paying job market.
Remote work, coupled with affordability, appears to be a big draw for snowy Buffalo, New York’s high ranking on the list, while a lack of income tax and cultural attractions puts Nashville in the fourth slot.
The Play for Landlords
For landlords who don’t intend to buy pricy rental properties in San Jose, New York, or Los Angeles, less expensive markets with growing economies in the South and Midwest remain good places to invest, given their long-term renter demographics. A September survey by multifamily-focused property management company Entrata found that three-quarters of Gen Zers plan to continue renting long into the future, unwilling to be shackled to a mortgage.
“What the survey told us about Gen Z is that renting is a great way of life for them,” Entrata’s industry expert, Virginia Love, told Newsweek. “While homeownership is something they want at some point in life, they are sort of rewriting their timeline. They don’t feel like they need to follow the whole ‘college, marriage, baby, house, bigger house’ timeline; they can create whatever life they want.”
Employment challenges also keep younger Americans away from homeownership.
“We are seeing less people in that 20-to-24 age group categorized as fully employed,” Jimmie Lenz, a financial economics professor at Duke University, told Newsweek. “There’s a lot more people that are employed by gig work and things like that, and those are jobs that tend to make it a little more difficult to afford mortgages, and in particular, the kind of traditional 30-year fixed-rate mortgage.”
Playing It Safe: Investing in Areas Where Gen Z Renters May Want to Buy
It’s unreasonable to expect Gen Z renters to want to rent forever, even if that’s what they might say now. Parenthood, increased earnings, and a desire to step away from the risk of escalating rents mean that, at some point, homeownership might be on their wish list. Thus, investing in markets with both a high percentage of Gen Z renters and affordable housing is a sensible move.
According to Cotality, unsurprisingly, Gen Z mortgage loan applications (the data was collected in 2024) were heaviest in less expensive Midwest markets such as:
- Des Moines, Iowa (21%)
- Omaha, Nebraska (21%)
- Youngstown, Ohio (20%)
- Dayton, Ohio (20%)
- Grand Rapids, Michigan (20%)
Other Southern markets that made the top 10 rental markets for Gen Z also made the top mortgage application list, such as Birmingham, Alabama (19%), and Jackson, Mississippi (19%).
Cross-referencing both sets of data will give prospective landlords a good indication of stable future rental markets.
Final Thoughts
In Apartment List’s 2026 State of Renting Report, one thing becomes evident: Gen Z is chronically challenged financially, and that is affecting every major life decision, including where they live. However, 87% of those surveyed said buying a home remained a major life goal.
For investors, this means renting to Gen Z tenants who work and may one day want to live in a particular location makes sense, as does offering different options, such as holding the note on a property for a more passive rental experience. Offering the option to rent along with the option to buy, or simply tying the tenant to a long-term lease with predictable, affordable rental increases, provides both the landlord and tenant with peace of mind through a long-term solution.
Discussion about this post