With a lifetime of earnings potential behind them, you might expect older folks to be more secure financially than their children or grandchildren. But according to a new Zillow survey, older renters are more often financially vulnerable than those in younger generations.
As a whole, renters – those who moved in the past year and rent their home – are financially strapped enough that two-thirds say they make at least one financial sacrifice just to make rent each month and barely half (51%) say they could accommodate an unexpected $1,000 expense. That’s according to the 4th annual Zillow Group Report on Consumer Housing Trends, the country’s largest and most comprehensive survey of real estate consumers.
Baby Boomer and Silent Generation renters report more difficulties than their younger counterparts. Just 38% of older renters say they could afford this type of surprise bill, while more than half of Millennial (54%) and Gen Z (60%) renters say the same.
The generational breakdown is completely reversed for homeowners, highlighting how these financial challenges particularly affect older households that rent their home.
“While older homeowners as a group are more financially secure than their younger counterparts, there are signs that older renters may be among the most vulnerable,” says Zillow Economist Kathryn Coursolle. “The youngest group of renters often has the safety net of family members, but the situation can be more precarious for older renters.”
The freedom to move relatively easily and live without the burden of maintenance and upkeep responsibilities makes renting an ideal lifestyle for many. But another group of renters who aspire to own a home are finding it difficult to save for a down payment amid rapid home price growth in much of the country. And affordability is getting tighter for renters, too – renters typically spend a larger share of their income on rent than they did a year ago in 28 of the 35 biggest U.S. metros.
“Many older renters desire to own their home but have stayed in the rental market because they struggle to financially attain homeownership amid rising home prices,” Coursolle said. “The steady upward march of rental prices across the U.S. makes affording rent often on a fixed income a very real challenge.”