Rent costs are quickly outpacing Gen Z and Millennials incomes, and inflation is hitting them harder because of it.
Millennials who signed new rental leases in June and July 2022 saw their overall monthly costs increase 11.6% year over year, significantly higher than the 8.5% the rest of Americans faced. Generation Z is also facing higher inflation, with a personal rate of 11.3% for new renters, according to a new study by Redfin.
While income levels for both Gen Z and millennials have increased by nearly 10% since 2020, their overall expenses increased by 17%, leaving them with less income to grapple with rising costs, according to the study.
“Inflation is hitting young renters hard because not only have prices of everything from food to fuel soared, but so have rental prices,” Sheharyar Bokhari, a Redfin senior economist, said in a statement.
Today, some leases are charging nearly 25% more than they did in 2020 for the same unit, according to the study. This is crushing millennials and Gen Zers, who spend more than the recommended one-third of their income on housing each month.
To add onto this, renters in some major metropolitan areas are facing significantly higher inflation rates. The top three metropolitan areas where young renters were hit the hardest by inflation were Seattle, Miami, and New York.
Gen Zers who rent in Seattle are paying 17.1% more for goods and services than they were in June 2021, and millennial renters are paying 16.8% more, which was the highest inflation rate of all the metropolitan areas surveyed. To put this into perspective, the typical inflation rate in Seattle for the same time period area is 10.1%.
In Miami, Gen Z and millennial renters faced an inflation rate of 14.2% and 14% respectively, which is higher than the 10.6% overall inflation rate for the area. Interestingly, young New York City renters paid almost double in inflation than the typical New Yorker, 12.7% average compared to 6.5%.
On the other hand, the Midwest provides some financial relief for both Gen Z and millennial renters. In Minneapolis, they faced a lower inflation rate than their elders: Gen Z renters were paying 5.4% more than in June 2021 and millennials 5.7% more, while the average in the Midwest was 8.2%.
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