By Jennifer Conrad, Managing Editor
As the oldest members of Generation Z, a digitally savvy cohort, approach their 30s, they face a unique challenge: Can they afford to rent or buy a home? They’re the digital natives, the social media experts—the generation poised to surpass even their millennial predecessors in education, diversity, and earning power. However, as the first wave of Generation Z approaches 30, a new challenge emerges: affording a place to call home.
Our investigation using IPUMS data into historical housing costs and spending patterns across nearly 200 metro areas has yielded intriguing results, particularly for Generation Z in Phoenix. We compared Gen Z’s projected housing expenses to those of Millennials during the same stage of life, revealing unique insights into the housing market situation for this pivotal generation in Phoenix.
The Rent-to-Own Divide in the Valley of the Sun
For Phoenix’s Gen Zers, renting by age 30 is expected to hit $150,912. That’s a hefty sum, but it’s enough to cover the mortgage on a home in more affordable metros like Rochester, NY, or Baton Rouge, LA.
The exciting part? Owning a home in Phoenix is within reach at just $175,649 – including the mortgage, taxes, and fees (excluding the down payment). That’s a mere $24,737 more than you would spend renting. Our analysis found that this ‘relatively small difference is quite notable.’ Gen Zers in Flagstaff, on the other hand, need an extra $47,866 to switch from renting to owning.
Earning More, Spending More
On a national scale, Generation Z is on track to earn around $550,000 in their 20s—14% more than what Millennials did at the same age. Yes, their housing costs are higher, but so are their wages. While millennials in Phoenix spent $126,190 on rent in their 20s, Gen Z is projected to shell out $150,912 – a 14% increase. The data shows that renting costs account for 27% of the income from ages 22 to 29, the same percentage for millennials. However, Generation Z’s wages are significantly higher, painting a promising financial future.
Smoother Sailing Than the Coasts
The situation could be more challenging elsewhere. For instance, Gen Zers in San Jose face a staggering $170,890 gap between renting and owning costs in their 20s. Renting there costs nearly $300,000 before 30, while buying a home (excluding the down payment) can reach $466,000. In Ann Arbor, Generation Z can save $21,400 by purchasing versus renting. The data shows a more favorable housing landscape for Phoenix’s Gen Z than other parts of the country. With a comparatively small rent-to-own divide, this digitally native generation may have a smoother path to homeownership in the Valley, providing a sense of security and stability.
