SEATTLE, June 11, 2020 /PRNewswire/ -- Skyrocketing
unemployment across the U.S. has prompted millions of adults to
move back in with their parents. A new Zillow® analysis shows
potential rent lost from Gen Z alone could total an estimated
$726 million, and the ripple effects
of their next move could have far-reaching consequences for the
housing market.
The number of adults living in a parent's or grandparent's home
grew by more than 2.7 million in March and Aprili,
nearly triple the next-largest two-month increase from the past
five years. A large majority of those who moved home -- about 2.2
million -- are from Generation Z, and between 18 and 25 years
old.
Those 2.2 million Gen Zers represent an estimated $726 million in rent payments each month --
payments that could be lost if these moves prove to be more than a
temporary measure. That represents about 1.4% of the rental market
at risk. It is highly unlikely that all leases will be broken and
this full amount would go unpaid, but it serves as a gauge of the
potential impact on housing.
The next move this population makes could shape the housing
market's near future. If jobs quickly return to pre-pandemic
levels, the housing status quo could return just as quickly as
these renters return to the market. But if jobs are permanently
lost or slower to recover than expected, that could free up many
rental units and drive down prices.
"The share of adults living with their parents has been high
since the global financial crisis of the aughts," said Zillow
Senior Principal Economist Skylar
Olsen. "Then, it was Millennials flocking to the basements
and spare bedrooms of their Baby Boomer parents, where many
remained as rent burdens grew. Now, it's Gen Z's turn to ride out
today's crisis amid massive unemployment. 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. Apartment
construction has exceeded historic norms in recent years and some
are likely to double up or live more affordably in all kinds of
ways, which should soften rent growth, at least for now."
Previous Zillow research has shown renters in some
industries highly affected by coronavirus-related layoffs were
struggling to keep their heads above water even before the pandemic
began. It's possible that many will appreciate the breathing room
afforded by living with parents if allowed to stay rent-free, and
stay even after their jobs return. That could allow some Gen Zers
to save enough to move into homeownership more quickly, or perhaps
even delay their parents from downsizing into a smaller home while
a child is still living under their roof.
Young Americans move more often in general because they tend to
have less stable employment and have not had time to accrue the
same level of savings as older counterparts. Many also move home
during the summer due to college schedules, typically bumping up
the share of young adults living with parents by 2-3 percentage
points from April to July.
It is likely that some college students made that move earlier
this year as campuses closed due to COVID-19, contributing to the
jump seen in April, but there were far more young people living
with parents in April than even during a typical summer peak,
indicating the usual seasonal shift was super-charged by soaring
unemployment. Recently unemployed young people moved back home at
roughly the same rate as usual -- about 60% of them typically live
with parents -- but the pool is much bigger than ever.
Metros with a higher share of young renters have a greater
potential for impact. This includes Austin, Kansas
City, Cincinnati and
Pittsburgh. On the other end are
areas with more millennials and older renters, including
Miami, New York and Los
Angeles, each with less than 1% of the rental market made up
of young people who have moved home.
Metropolitan
Area
|
Share of
Renters in Gen
Z
|
Potential Lost
Rent from
Gen Z Moving Home ($)
|
Potential Lost
Rent from
Gen Z Moving Home (%)
|
United
States
|
13.2%
|
$726,135,821
|
1.4%
|
New York,
NY
|
6.7%
|
$43,590,656
|
0.8%
|
Los Angeles-Long
Beach-Anaheim, CA
|
7.9%
|
$35,781,789
|
0.9%
|
Chicago,
IL
|
10.9%
|
$19,304,594
|
1.3%
|
Dallas-Fort Worth,
TX
|
13.3%
|
$18,969,375
|
1.4%
|
Philadelphia,
PA
|
11.1%
|
$11,702,335
|
1.3%
|
Houston,
TX
|
11.2%
|
$13,318,544
|
1.2%
|
Washington,
DC
|
11.3%
|
$17,983,777
|
1.3%
|
Miami-Fort
Lauderdale,
FL
|
5.9%
|
$9,089,428
|
0.7%
|
Atlanta,
GA
|
11.4%
|
$12,216,626
|
1.3%
|
Boston, MA
|
12.8%
|
$16,990,170
|
1.5%
|
San Francisco,
CA
|
9.5%
|
$15,460,465
|
1.0%
|
Detroit,
MI
|
10.4%
|
$6,208,775
|
1.2%
|
Riverside,
CA
|
8.5%
|
$6,541,152
|
0.9%
|
Phoenix,
AZ
|
14.2%
|
$12,122,281
|
1.6%
|
Seattle,
WA
|
14.4%
|
$15,326,555
|
1.5%
|
Minneapolis-St
Paul,
MN
|
15.9%
|
$8,117,613
|
1.6%
|
San Diego,
CA
|
11.4%
|
$12,749,956
|
1.3%
|
St. Louis,
MO
|
15.0%
|
$5,657,245
|
1.7%
|
Tampa, FL
|
11.2%
|
$6,651,328
|
1.3%
|
Baltimore,
MD
|
11.1%
|
$5,789,817
|
1.3%
|
Denver, CO
|
13.9%
|
$9,701,531
|
1.5%
|
Pittsburgh,
PA
|
15.7%
|
$4,573,638
|
1.8%
|
Portland,
OR
|
13.0%
|
$6,921,789
|
1.4%
|
Charlotte,
NC
|
12.8%
|
$5,329,863
|
1.4%
|
Sacramento,
CA
|
14.4%
|
$6,800,659
|
1.5%
|
San Antonio,
TX
|
12.1%
|
$4,721,297
|
1.4%
|
Orlando,
FL
|
12.0%
|
$6,331,807
|
1.4%
|
Cincinnati,
OH
|
17.2%
|
$4,833,360
|
1.8%
|
Cleveland,
OH
|
11.4%
|
$3,454,026
|
1.3%
|
Kansas City,
MO
|
16.8%
|
$5,416,970
|
1.9%
|
Las Vegas,
NV
|
9.2%
|
$4,602,413
|
1.0%
|
Columbus,
OH
|
15.2%
|
$5,086,970
|
1.7%
|
Indianapolis,
IN
|
14.8%
|
$4,520,471
|
1.6%
|
San Jose,
CA
|
9.1%
|
$6,599,858
|
1.0%
|
Austin, TX
|
18.3%
|
$9,094,471
|
1.9%
|
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i Source: Integrated Public Use Microdata
Series-Current Population Survey, University
of Minnesota, www.ipums.org
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SOURCE Zillow