As unemployment rates soared nationwide due to COVID-19, millions of adults have moved back into a family member’s home. This could cause a potential rent loss from Generation Z alone of $726 million, according to a new Zillow analysis.
During March and April, the number of adults living in a parent’s or grandparent’s home grew by more than 2.7 million, which is nearly three times the next largest two-month increase over the past five years. This puts the number of adults living with their parents or grandparents in April at 32 million, the highest number on record. In addition, 2.2 million are from Gen Z— between 18 and 25 years old—and represent an estimated $726 million in monthly rent payments. These payments, about 1.4% of the rental market, could be potentially lost if these moves become more than temporary.
Zillow is watching the population’s next steps. If jobs quickly return to pre-pandemic levels, renters could return to the market. If they are permanently lost or slower to recover, many rental units could be freed up with prices on the decline.
“The share of adults living with their parents has been high since the global financial crisis of the aughts. Then, it was millennials flocking to the basements and spare bedrooms of their baby boomer parents, where many remained as rent burdens grew,” said Zillow senior principal economist Skylar Olsen. “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 retuning to living on their own even if some underemployment 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.”
In addition, the nation’s young adults move more often in general because they tend to have less stable employment and have not accrued as much savings. The number is also bumped up by 2 to 3 percentage points annually from April to July when many students return home for summer due to college schedules.
However, many students may have moved home earlier because of campus closures due to COVID-19, contributing to April’s jump, but far more young adults were living with parents during that month than during a typical summer peak, indicating a shift that may have been more affected by unemployment rates.
According to Zillow, metros with a higher share of young renters are at greater risk. This includes Austin, Texas; Cincinnati; Kansas City, Mo.; and Pittsburgh. At the other end of the spectrum, areas with more millennials and older renters, including Los Angeles, Miami, and New York, each have less than 1% of the rental market made up of young people who have moved home.
