Gen Z Rent Burden: A Data Analysis of Housing Affordability in Top U.S. Metros

This analysis of the top 10 U.S. metros by Gen Z renter households reveals a critical disconnect between rent price and true affordability, presenting a new lens for assessing future market risk and opportunity.

While New York has the highest average rent ($2,496), it is Los Angeles where Gen Z renters are most cost-burdened, spending an average of 42.2% of their income on housing. This disparity, driven by a mismatch between local incomes and rents, is also seen in Dallas and Atlanta, which rank second and third for rent burden despite having more moderate rents.

For mortgage lenders, this data provides a leading indicator of the financial health of the next wave of homebuyers. Gen Z’s low national homeownership rate (20.23%) signifies a massive future borrower pipeline. However, the high rent burdens in these key markets point to a generation with diminished savings capacity and potentially higher DTI ratios.

Strategic Positioning

Lenders who use this data to identify markets where low down payment products (e.g., FHA loans) and down payment assistance are most needed will gain a significant competitive advantage over the next decade.

Notes: The Rent-to-Income Ratio is the median of ratios calculated at the individual household level from IPUMS USA ACS PUMS microdata (2019-2023). MSAs were constructed from PUMAs.