Most Chicago Gen Z renters spend 30% of income on rent

Chicago young professionals are buying compact condos and splitting one-bedroom apartments to afford city living.

Why it matters: Steep prices and mortgage rates pose seemingly insurmountable hurdles to homeownership — and renting isn't necessarily an affordable alternative.

• Spending 30% of your income on rent is "the new normal," according to economists at Moody's Analytics.

Driving the news: One in three Gen Zers (34%) surveyed by Freddie Mac say owning a home feels impossible in their lifetime, up from 27% in 2019.

• Saving for a down payment is the biggest obstacle, they say: It's one reason the typical first-time homebuyer last year was a record-high 36 years old, per the National Association of Realtors.

Zoom in: Matthew Cabrera, 24, was able to buy a studio in Streeterville this year with help from his family. They put the money he saved by graduating college early toward a down payment on the 500-square-foot space.

• Cabrera, who was previously renting, says his decision to buy was partly fueled by a concern over rising rent prices.
• If he didn't buy, he "probably would have moved back home to the suburbs to save up more money," says Cabrera, who tells Axios he spends 25% of his income on his monthly mortgage payments, including H.O.A. fees.

What's happening: Across the U.S., pinched young people are fanning out from big cities, returning to their childhood bedrooms or moving in with partners.

• Fannie Mae researchers found 30% of young workers are willing to live farther away from the office for more inexpensive housing.
• Nearly a third of Gen Z adults say they're living at home long-term, The New York Times reports.

Zoom out: America's housing shortage has helped hike the cost of both buying and renting.

Yes, but: The vast majority of young renters are renting for lifestyle reasons, preferring the flexibility to move, RealPage chief economist Jay Parsons tells Axios.

Most of Chicago's youngest renters are spending at least 30% of their income on rent, according to the latest U.S. census data.

• In all of the 100 biggest U.S. metros, over a third of 15- to 24-year-old householders who rent spend 30% or more of their income on housing, Axios' Simran Parwani reports.

The big picture: Many Gen Z renters have lower incomes but also lower bills beyond rent, which allows them to live in pricier locations, according to Parsons.

Between the lines: Older Americans on fixed incomes are especially burdened by high housing costs, contributing to rising homelessness among Baby Boomers, The Wall Street Journal reports.

Go deeper: Student loan interest has started again, adding to affordability pressures.