HOUSTON – (By Dale King, Realty News Report) – Soaring COVID-19-related unemployment across the U.S. has impelled millions of young adults to move back in with mom and dad.
A survey conducted by real estate website Zillow shows that potential rent lost by members of Generation Z alone – those born in 1997 or later and raised totally in the digital age — could cost the nation an estimated $726 million – and deprive landlords from the four major metro areas in Texas of more than $46 million.
“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 flocking to the basements and spare bedrooms of their Baby Boomer parents, where many remained as rent burdens grew,” Olsen added.
“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.”
The oldest members of Gen Z are 23 years old – many just finishing college and breaking into the professional work force.
The Lone Star State is taking a daunting hit because Dallas/Fort Worth, Houston, Austin and San Antonio all have relatively large numbers of Gen Z’ers living in their midst, says the Zillow report.
Statistically, 13.2% of the American population is made up of renters in Generation Z. If they all choose to stay under their parents’ roof, the rental market could lose $726 million.
The report does add, in an apparent effort to mollify landlords: “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 readout for Texas is:
- In Houston, 11.2% of renters are part of Generation Z. If they decide to pull up stakes and go home, it could deprive the local rental market of $13,318,544.
- In Dallas/Fort Worth, 13.3% of renters are Gen Z’ers. Relocation to their childhood digs could cost the market for rental units $18,969,375,
- In Austin, nearly one in five renters (18.3%) is a certifiable Gen Z’er. If they move in with their parents for anything less than a short stint, the rental market will lose just over $9 million, says the Zillow report.
- San Antonio is a close match to the nationwide percentage, with 12.1% of renters listed in Generation Z. If they remain glued at home, the rental market could be deprived of about $4.7 million.
Zillow’s Olsen said the market’s future is festered with “ifs.”
“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.”
Previous Zillow research has shown renters in some industries highly impacted 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 Z’ers 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,” said Olsen.
Young Americans, she added, 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.”
The report says metros with a higher share of young renters have a greater potential for impact. This includes Austin, Kansas City, Cincinnati and Pittsburgh, among others. Areas with more Millennials and older renters — including Miami, New York and Los Angeles– are bearing up a bit better. 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.
June 15, 2020 Realty News Report Copyright 2020