Millennial and Gen Z renters face the highest inflation rates, new study finds

Inflation hits younger renters the hardest. Millennials who signed a new lease in July saw an 11.6 percent increase in their overall cost of goods and services, according to the new Redfin report. Meanwhile, inflation for an average American reached 8.5 percent.

Gen Z – those born between 1997 and 2012 – also saw a higher than average increase in their expenses. The personal inflation rate for Gen Z renters reached 11.3 percent this July. Personal inflation gives people a much better understanding of the impact rising prices have on their budget. Both Millennials and Gen Zers have to allocate more than 25 percent of their income to housing, the largest spending category. 

“Inflation is hitting young renters hard because not only have prices of everything from food to fuel soared, but so have rental prices,” said Redfin Senior Economist Sheharyar Bokhari. 

Redfin found that the asking rents increased 13.5 percent from July of last year and 25 percent from before the pandemic. While rising inflation affects spendings of every American, it is more severe for the younger generations since the majority of them do not own a home. The Millennial homeownership rate stands at only 48.5 percent. By contrast, 80 percent of baby boomers and 70 percent of Gen Xers own their homes. 

“Homeowners are forking over more money at the grocery store and the gas pump, but at least the number on their mortgage statement isn’t going up every month. Combine high rental prices with student loan debt and relatively low incomes, and it’s difficult for millennials and Gen Z renters to put money into savings, retirement accounts and down-payment funds to eventually buy a house. They may also have higher interest rates on debt, which cuts further into their potential savings,” Bokhari said. 

The location also plays a significant role in personal inflation rates. Young renters in New York, Miami, and Seattle have higher inflation rates than their peers in other cities. Zoomers in Seattle saw their cost of goods and services rise 17.1 percent, the highest inflation rate among the 21 analyzed metros. Gen Z renters face a 14.2 percent inflation in Miami and a 12.8 percent inflation in New York. Millennial renters in these cities also have similar personal inflation rates.

Resources:

“Millennial and Gen Z Renters Have Inflation Rates Above 11%, Compared with 8.5% For the Typical American,” by Dana Anderson, Theodore Velentzas and Sheharyar Bokhari (Redfin, 2022)