The economic upheaval caused, in part, by the COVID crisis is doing something perhaps unexpected – getting those in the “Generation Z” demographic out of their parents’ houses – while encouraging those occupying smaller apartments to consider trading up to something with more room, greater amenities or a more preferred location.
And in the Washington region, there is more incentive to do so than anywhere else in the nation.
Rental concessions, such as a free month’s rent, appear to be luring Gen Z (ages 18 to 25) out of their parents’ basements and into the rental market, according to new research from Zillow.
A Zillow survey finds more than a third (34 percent) of Gen Z renters who relocated in the past year say they moved from the home of a family member or friend. That’s up from 20 percent who reported the same in an April survey.
The survey is consistent with previous Zillow research that found the number of young adults living with parents or grandparents was beginning to fall in September, after rising dramatically in the spring.
As for renters who moved from a previous rental within the past year, a majority aren’t necessarily saving money – slightly more than 50 percent report paying more than before. But many of them are benefiting from concessions offered by landlords, which can translate into major savings.
Rental concessions climbed from 16 percent of available apartment offerings to 30 percent between January and August. Since then, the share of rentals offering concessions has stabilized at around 34 percent nationally in October – with notable exceptions.
Most notable was in the Washington region, where the units featuring rental concessions (already nearly 33 percent a year ago) grew to a whopping 62.4 percent this October, almost off the chart. The only localities close were Charlotte (53.6 percent) and San Jose (52.1 percent).
Concessions often add up to big savings for renters. Concessions offered in six large markets (Boston, Chicago, Indianapolis, New York, Philadelphia and the District of Columbia) amounted to savings equal to two months free rent, assuming a year-long lease (an overall savings of 16.7 percent). That compares to 8.3 percent as the median rate in all the markets studied.
The high rate of concessions is giving a chance for people to trade up.
“What we’re seeing is that renters who might have been in a small apartment are instead looking at larger units – maybe a two-bedroom instead of a one-bedroom,” said Zillow Premier Agent Kenny Truong, founder of Fast Real Estate in the San Francisco Bay area. “Some others are moving to a rental with a view or a yard for a similar price.”
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