Oct 17, 2023 - News

Gen Z in Bay Area likely to spend 30% of income on rent

Share who spend 30 percent or more of their income on housing in the San Francisco area, 2022
Data: U.S. Census Bureau; Note: Based on household income. Householder is the person/people in whose name the housing unit is owned or rented. Renter housing costs include monthly contract rent and utilities paid by the renter while owner costs include monthly mortgage payments and other debts, utilities, real estate taxes, insurance, etc. Chart: Simran Parwani/Axios

Amid the Bay's housing affordability crisis, two-thirds of the San Francisco area's youngest renters are spending at least 30% of their income on rent, according to the latest U.S. census data.

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

Zoom in: In the San Francisco metro area, 66% of renters ages 15–24 spent 30% or more of their income on rent last year.

  • That's far higher than the rate among local renters 25 to 64. Among those renters, 40%-45% spent at least 30% of their income on rent last year, per census data.
  • San Francisco ($3,142 per month) and San José ($3,333 per month) were the fourth and second most expensive major markets for rent in September, per a recent Zillow report.

Of note: To address the risk of homelessness for vulnerable young adults, San Francisco has established specific housing programs for people ages 18-24 who are transitioning from public systems like foster care.

  • The city currently has over 820 units dedicated to people in that age range.
  • It also acquired a fourth building this year that will serve as a permanent supportive housing site for young adults exiting homelessness.

The big picture: One in three Gen Z-ers (34%) surveyed by Freddie Mac say owning a home feels impossible in their lifetime, up from 27% in 2019.

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.

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

Reality check: Older Americans on fixed incomes are especially burdened by high housing costs, contributing to rising homelessness among baby boomers, The Wall Street Journal reports.

  • In the San Francisco metro area, 57% of renters over 65 spent at least 30% of their income on housing last year — the second-highest across all age groups.

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

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