Older Detroiters, Gen Z spend 30% of income on rent
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Both Gen Zers and older people in Detroit are spending a big chunk of their paychecks on rent.
Why it matters: Steep prices and mortgage rates pose seemingly insurmountable hurdles to homeownership — and renting isn't necessarily an affordable alternative anymore.
- Spending 30% of your income on rent is "the new normal," according to economists at Moody's Analytics.
By the numbers: In 2022, 56% of Metro Detroit renters 24 and younger spent 30% or more of their income on housing, while 58% of renters 65 and older spent 30% or more, according to the most recent U.S. Census data.
- That percentage is lower for homeowners in every age range, but a down payment to become one remains a huge obstacle.
Driving the news: One in three U.S. 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.
The big picture: Across the U.S., pinched young people are fanning out from big cities, returning to their childhood bedrooms or moving in with partners.
- In all of the 100 biggest U.S. metros, over one-third of 15- to 24-year-old householders who rent spend 30% or more of their income on housing, Axios' Simran Parwani reports.
Yes, but: The vast majority of young renters do so for lifestyle reasons, preferring the flexibility to move, RealPage chief economist Jay Parsons tells Axios.
- Many Gen Z renters have lower incomes but also lower bills beyond rent, which allows them to live in pricier locations, according to Parsons.
The bottom line: America's housing shortage has helped hike the cost of both buying and renting.
💠Sam's thought bubble: Myself and most every single Gen Zer I know are among this group. With student loan payments back on, it seems like saving money is impossible.