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The personal inflation rate for Gen Z renters is lower than that of the general population for the first time since 2020, according to a new report.
Members of Gen Z and millennials who signed new leases in December saw their cost of goods and services increase 5.6% and 6.1%, respectively, compared to the 6.5 percent increase recorded by the general United States population, according to the report released Wednesday by the online brokerage Redfin.
That shift, though slight, is a welcome reprieve for young renters who saw their personal inflation rates skyrocket during 2022 as rents hit new highs.
“Ebbing price growth means renters moving now may be getting a better deal than those who signed a new lease in late 2021 or 2022,” Redfin Senior Economist Sheharyar Bokhari said in a statement. “Asking rents have already dropped from the apex they reached last summer and they’ve fallen from a year ago in many parts of the country, including Phoenix, Austin and Los Angeles.
It also marks the first time since 2021 that Gen Z has an overall lower inflation rate than the general population, a shift the report attributes to the pace of rental price growth slowing. Gen Z, renters and otherwise, had an overall personal inflation rate of 6.4 percent in December, while millennials had a slightly higher-than-average rate of 6.8 percent.
New lease signers most likely had a generally lower inflation rate due to the slowing of rent price growth, Redfin said, with rents now increasing slower than the overall cost of housing.
The median asking rent increased by 4.8 percent year over year in December, the smallest increase in a year-and-a-half and a sharp drop from the 16 percent increase recorded in July.
At the same time, overall shelter costs have risen 7.5 percent annually, according to the Consumer Price Index, while consumer wages have risen only 4.4 percent between January 2022 and 2023, marking the first time asking rents have been outpaced by the growth of overall shelter costs in a year-and-a-half.
“People looking to move now may also want to take advantage of declining demand and negotiate with landlords about perks like free parking or a free month’s rent – and those who are staying put may have some bargaining power when renewing their lease,” Bokhari said.
Young renters also stand to benefit by waiting a few months before entering the housing market, as asking rents are likely to decline across the nation, according to Bokhari.
“Those who are on the fence about continuing to rent or buying their first home may also benefit from waiting a few months before locking in a new lease,” Bokhari said. “If mortgage rates and home prices continue dropping from their peak, entering the housing market will be more affordable than it is today. Depending on individual circumstances, that could shift the math on whether renting or buying makes more financial sense.”
