Gen Z by Age 30: Renting Becomes the Go-To Housing Option With a Total Cost of $145,000

Generation Z is emerging as the most diverse and potentially the best-educated group in American history, setting them up to possibly become the highest earners yet. But, the question arises: How does Gen Z manage when it comes to affording rent or buying a home as they approach their 30s, especially compared to their predecessors, the Millennial generation?

To shed light on how much Gen Z should expect to pay for housing before they reach 30, we delved into historical housing costs and earning and spending patterns in nearly 200 metro areas in the U.S. using IPUMS data. Specifically, we looked at Millennials’ housing costs when they were the same age (22 to 29) for comparison and projections.

Our findings reveal that this digitally savvy generation, which numbers almost 66 million, will earn a total of $550,000 in their 20s. That’s 14% more than Millennials did before turning 30. As expected, income levels vary depending on metro, but are significantly higher in coastal metros, peaking in Silicon Valley’s San Jose and San Francisco.

When it comes to housing costs, Gen Z will be spending $145,000 on rent by their 30th birthday, while Millennials spent $127,000 during the same stage of life (14% more). Notably, Gen Z’s renting costs account for 27% of their income from ages 22 to 29 (which is the same percentage as it was for Millennials) because Gen Z’s wages are higher today.

 

 

In either case, homeownership presents a bigger financial challenge for both Gen Z and Millennials in their 20s: Homeownership costs would account for 30% of Gen Z’s income during this eight-year span, whereas Millennials put a much higher percentage, 36%, toward owning a home before the age of 30.

Granted, renter life in major rental hubs on the coasts is costlier for Gen Zers. In particular, the Bay Area, Boston and exotic Honolulu stand out when it comes to renting costs for Zoomers by 30. But, at the same time, these places also offer the highest incomes for digital natives.

 

Gen Z pays $145,000 in rent and $165,000 for owning by 30

The earning power of most Gen Zers during their 20s (ages 22 to 29) is substantial as they're raking in close to $550,000, on average. Plus, in a few select coastal metros, digital natives earn around $1 million in the first decade of their adulthood. When it comes to housing costs, by the age of 30, Gen Z is on track to spend $145,000 on rent — enough for a top-of-the-line Tesla. 

So, what about buying a house? Owning a home for eight years leading up to their 30s would cost Gen Z around $165,000. This includes mortgage, taxes, insurance and other expenses, with the exception of the down payment.

Meanwhile, their predecessors, Millennials, had lower costs for rent (by about $18,000) of $126,000 between 22 and 29 years old, but also earned about $70,000 less in their 20s ($480,000). Nevertheless, homeownership came at a higher price tag for Millennials with costs for the same eight-year span totaling $172,000, which is nearly $7,000 more than what Zoomers would pay. This would explain why the former generation took longer to reach the homeowner-majority milestone.

 

 

Interestingly, both age groups spend the same share of their income on rent between 22 and 29 years old. That’s 26.5% for each generation, which is below the 30% threshold. Of course, this share translates differently to each young adult, depending on their income level. For instance, Gen Z spends 30.2% of their income on homeownership costs over eight years, while Millennials paid a hefty 36.1%. This means that renting is the more affordable option for both generations, lifestyle preferences aside.

In any case, the good news for Gen Z is that the gap between renting and owning is smaller than it was for Millennials while incomes are higher. Essentially, Zoomer owners fork out an extra $21,000 compared to those who rent by the time they celebrate their 30th birthday — a 14% difference. Millennials, on the other hand, faced a much steeper difference of 36%. That's $46,000 more for Millennial owners compared to Millennial renters younger than 30.

 

Gen Zers living in California pay most on rent by age 30 — up to $300,000

When it comes to the metros where Gen Zers will pay the most on rent by the time they hit 30, major tech areas in California take the lead. In fact, the metros where Zoomers will fork out the most for rent also happen to be the places that offer dream jobs, bucket list-worthy lifestyles and the highest salaries. Namely, these are the homes of tech unicorns like San Jose, CA, (#1) and San Francisco (#2); major surf hotspots like Honolulu (#3); or global entertainment, culture, and arts hubs like Boston (#4), New York (#5) and Los Angeles (#6).

San Jose tops the list of metros where Zoomers younger than 30 will pay the most on rent with costs adding up to a staggering $296,000. Likewise, San Francisco is a close second at $287,000. Big-city life is also heavier on Gen Z renters' wallets as metros like New York, Los Angeles, Boston, and San Diego cost more than $220,000 in rent for eight years (from ages 22 to 29). Otherwise, costs are below $190,000 in Denver; Miami; Sacramento, CA; and Portland, OR.

 

 

On another note, Gen Zers living in these metros will earn at least half a million dollars by the time they reach 30, with those in San Jose and San Francisco reporting more than $1 million in that same period.

For comparison, Millennials faced a similar challenge as the top metros for rent costs were the same as they are for Gen Z — San Jose ($235,000), San Francisco ($218,000), Honolulu ($218,000), Boston ($199,000) and New York ($197,000). Like Zoomers, Millennials renting in these areas earned more than $500,000 between ages 22 and 29, while those in Silicon Valley's San Jose grossed more than $1 million.

 

Renting is a no-brainer for Gen Zers younger than 30 in places like San Jose and Seattle due to high owning costs

San Jose tops the list of locations with the biggest differences between owning and renting costs for Gen Zers younger than 30. Here, homeownership will cost nearly $171,000 more compared to renting — by far the largest amount on our list. That’s because a Zoomer renter in San Jose will spend 23.7% of their income on housing by the time they reach 30 as compared to a Gen Z homeowner, who will need 37.4% of their wages for their mortgage payment, home insurance, real estate taxes and more. However, San Jose is also where a Gen Zer earns close to $1.3 million in their 20s, the highest average in the nation.

 

 

Two more California metros follow closely behind — Los Angeles and Yuba City (north of Sacramento). In both locations, homeownership costs for Gen Zers would exceed renting costs by more than $100,000 by the time they toast their 30th birthday.

For instance, in the City of Angels, the cost of owning would consume nearly half of a Zoomer's salary (47.3% — the largest share among the top 10 metros with higher homeownership costs), whereas renting between the ages of 22 and 29 would add up to 32% of a Gen Zer's income. It's worth noting here that Los Angeles is also the place where Millennials allocated the highest percentage of their income toward homeownership costs by age 30 — a staggering 49.9%.

Further south, San Diego (fifth on our list) has a similar story with owning costs adding up to 47% of a Zoomer’s salary, whereas renting would take up 32.8%. On the opposite coast, Connecticut’s Bridgeport and Hartford are fourth and sixth, respectively, in our top 10. In particular, Hartford stands out as a location where Gen Zers would spend more than 44% of their income on expenses related to owning a home, while renting costs are below the 30% threshold (27.2%).

To that end, here's a surprising trend: Renting expenses for Gen Z are below the 30% threshold in almost all of the metros in our top 10, with the exception of Los Angeles (32.1%) and San Diego (32.8%).

Owning beats renting for Gen Zers younger than 30 in Ann Arbor, MI; Bloomington, IN; and Ocala, FL

Interestingly, Gen Zers are buying homes at a faster rate compared to other generations as more than one-quarter of them are already settled down in their own house. But, where is it easiest on the wallet to go from renter to owner as a Zoomer?

First on the list is Ann Arbor, MI, one of the Midwest’s most appealing ecosystems for tech companies. Here, ownership costs for Gen Zers aged 22 to 29 years old will add up to $136,000, which equals 23.8% of their income. This is less than the $157,000 they would pay on rent in the city west of Detroit and translates to 27.5% of their earnings. In simpler terms, buying a home in Ann Arbor saves a Zoomer a cool $21,000 compared to renting.

 

 

Meanwhile, the next two metros have a similar story: Ownership costs are below renting expenses in Bloomington, IN, (by $4,400) and Ocala, FL (by $3,400). Then, next up are three other Midwestern metros — Champaign, IL; St. Joseph, MO; and Grand Rapids, MI — as well as North Carolina’s Charlotte. In each of these places, the difference in costs between being a renter or owning by the time you’re 30 is less than $10,000.

Another location that stands out is Johnstown, PA, which came in seventh among the top 10 metros with the smallest difference in owning and renting costs. Here, Gen Zers spend only 23.2% of their income on mortgage payments, home insurance and other taxes related to homeownership. Although this is the smallest share among all top 10 locations, Johnstown is also the place where Gen Zers earn less than in the other metros on our list — $349,000.

Here's how much Gen Z would spend on rent and owning by the time they turned 30 in each state:

Methodology

RentCafe.com is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the U.S.

Using the most recent IPUMS data, our research team analyzed the rent and homeowning costs and incomes across 197 metros in the U.S. during certain time periods. Costs and income for each year in the sample have been adjusted to the 2023 value of the U.S. dollar.

We used the following year-of-birth ranges for each generation:

• Millennials — born between 1981 and 1996.
• Gen Z — born between 1994 and 2000. 

We calculated totals for the data spanning an eight-year period for each generation (from 22 to 29 years old). More precisely, we determined the average amount of money that each generation spent or would spend on rent or owning and the average income they earned during that same period at the household level.

For Gen Z, we used IPUMS data for the 22 to 25 years old age interval, whereas for 26 to 29 years old, we made an estimate by following Millennials’ behavior and patterns at the same age.

Rent costs defined by IPUMS refer to the gross monthly rental cost of the housing unit, including contract rent plus additional costs for utilities (water, electricity, gas) and fuels (oil, coal, kerosene, wood, etc.).

Owning costs are the sum of payments for mortgages, deeds of trust, contracts to purchase, or similar debts on the property (including payments for the first mortgage, second mortgages, home equity loans and other junior mortgages); real estate taxes; fire, hazard and flood insurance on the property; utilities (electricity, gas, and water and sewer); and fuels (oil, coal, kerosene, wood, etc.). It also includes, where appropriate, the monthly condominium fee for condominiums and mobile home costs (installment loan payments, personal property taxes, site rent, registration fees and license fees). The down payment was not included in the owning costs.

Household income refers to the total money earned as income by all household members.

Fair use and redistribution

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