Generous Concessions Drive Gen Z Back to the Rental Market

When the pandemic struck earlier this year, a large swath of Generation Z moved back home. Now many are returning, drawn by generous concessions and generation-friendly technology.  

A new Zillow survey found that concessions such as a free month of rent, free parking or a reduced security deposit enticed nearly half of Gen Z renters surveyed, 49%, to leave home and re-enter the rent market.

Rental concessions climbed from 16% to 30% between January and August. Since then, the share of rentals offering concessions has stabilized at around 34% nationally in October, with some exceptions. More than half of rental listings in Washington, D.C., Charlotte and San Jose offered some kind of concession in October.

Those price breaks can mean big savings for renters, Zillow noted. Concessions provided in Boston, Chicago, Indianapolis, New York, Philadelphia and Washington, D.C. added up to the equivalent of two months free rent on a year-long lease, providing 16.7%, or 1/6th, off of total rent.

“The effective savings rate is what renters would save on their typical housing costs over the course of their lease because of both lower rent prices and concessions,” said Zillow economist Joshua Clark. “Those savings could be enough to cover the cost difference between a one-bedroom and a two-bedroom unit.”

Trading Up

Many of these new renters, though, are not necessarily saving money.

More than half (51%) report paying more than before and 14% report paying the same. Nationwide, typical monthly rent was up 0.9% in September, but lower than last year in seven major metro areas, including Austin and Chicago. The upshot:  57% of Gen Z renters cite finding a better deal on rent as a reason for their move, suggesting they’re trading up.

But even as they trade up, renters are still finding deals.

Class A apartment concessions have been rising substantially in the most expensive markets in the country, according to Fannie Mae. As of last month, concessions in New York had risen to 12.6%, while San Francisco wasn’t far behind at 11.3% and Boston was next at 9.6%. 

Another plus for Gen Z is the technology that many landlords have put in place during the pandemic, with Zillow reporting that over six out of 10 of Gen Z renters who moved in the past year wished more listings offered a 3D tour (62%), and agree that three-dimensional tours would help give them a better feel for a space than static photos (64%).

Born after the advent of cell phones, members of Generation Z place a high value on technology, turning some traditional wisdom on what’s important to renters on its head. 

A recent survey by RENTCafe found that 28% Gen Z respondents said apartment technology was extremely important, while 34% said it was very important. In both cases, those percentages were higher than any other generation.

“High-speed internet was a bigger priority to Gen Z respondents than parking, gym or laundry services. Additionally, technologically advanced features like smart locks and thermostats, as well as energy-efficient appliances, ranked ahead of having extra space, such as an extra bedroom. Gen Z respondents preferred making online rent payments and maintenance requests (37%) and having a mobile app for managing rent and maintenance (28%).”