Gen Z in Bay Area likely to spend 30% of income on rent
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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.
- Spending 30% of your income on rent is "the new normal," according to economists at Moody's Analytics.
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.
- 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.
- Across the U.S., pinched young people are fanning out from big cities, returning to their childhood bedrooms or moving in with partners.
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.