The latest Zillow Research, dated November 16, 2023, indicates a notable change in the housing market, especially among Millennial and Gen Z home buyers. These groups are increasingly adopting "house hacking," a strategy where parts or the entirety of a home are rented out to generate extra income. This growing trend is a key finding in Zillow’s 2023 Consumer Housing Trends Report, which offers detailed insights into the reasons and demographics of those adopting this unconventional homeownership method.
Young homebuyers, who often struggle more with affording down payments and mortgages, are leading the charge in house hacking. Zillow's data shows that over half of Millennial and Gen Z buyers consider renting out a portion of their home for income as highly important. This is a significant increase compared to 39% of all homebuyers, a figure that has risen by eight percentage points in the last two years.
Furthermore, the prospect of renting out an entire home in the future for income is most appealing to Millennials (55%) and Gen Z (51%), outpacing Gen X (36%) and Boomers plus the Silent Generation (4%). This is in stark contrast to the 43% of all successful buyers, marking a nine-percentage-point increase from 2021.
Prospective buyers, particularly those from Gen Z and Millennials, are also more inclined to value the opportunity to rent out their entire home in the future. Among Millennials, this interest stands at 64%, followed by Gen Z (56%), Gen X (51%), and Boomers plus Silent Gen (23%). This suggests a potential growth in this trend.
In terms of the affordability crisis, the report highlights its disproportionate impact on households of color. Latinx homebuyers, for instance, show a greater interest in rental income opportunities, with 51% considering renting out part of their home while living in it. This is followed by 46% of Black buyers and 40% of white buyers.
The rising trend of house hacking is a practical response to the financial hurdles of homeownership, especially for younger people. The differences across racial and generational lines emphasize the need for customized solutions to meet the changing preferences and financial strategies in housing. As house hacking becomes more popular, it's crucial for policymakers and real estate professionals to adjust to these trends and support various paths to homeownership.
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