House Hacking: The Rising Trend Among Millennials and Gen Z Home Buyers

In a dynamic real estate landscape, Millennials and Gen Z home buyers are increasingly turning to innovative strategies to overcome financial hurdles associated with homeownership. A recent survey by Zillow reveals a surge in the popularity of "house hacking," a trend where homeowners rent out part or all of their homes to generate additional income. This strategy is gaining traction as a practical solution for young buyers grappling with down payments and mortgage costs.

Key Findings:

Zillow's 2023 Consumer Housing Trends Report (CHTR) highlights several key findings related to the growing interest in house hacking among young home buyers:

Significant Interest in Rental Income:

    • More than half of Millennial (55%) and Gen Z (51%) buyers find it very or extremely important to have the opportunity to rent out part of their home for extra income while living in it.

    • This interest has seen an eight-percentage-point increase among all home buyers over the past two years, reaching 39%.

Future Consideration of Renting Entire Homes:

    • Over half of Millennial (59%) and Gen Z (54%) buyers express the importance of being able to rent out the entire home in the future, compared to 43% of all buyers.

Financial Considerations for Homeownership:

    • Younger buyers, primarily Gen Z and Millennials, view rental income as a key factor in their home-buying decisions. For those navigating the challenges of the 'side hustle culture,' rental income becomes a valuable resource to qualify for mortgages and manage monthly payments.

Impact on Racial Groups:

The survey sheds light on the disproportionate impact of the affordability crisis on households of colour. Latinx homebuyers, in particular, prioritize the potential for rental income at a higher rate compared to other racial groups. Among Latinx buyers, 51% express interest in renting a portion of the home for additional income while residing in it, followed by 46% of Black buyers and 40% of white buyers.

Empowering Homeowners:

Recognizing the growing interest in generating income from properties, Zillow has developed a suite of tools available through Zillow Rental Manager. These tools include free listings, pricing suggestions, background checks, online applications, and state-specific lease generation, providing comprehensive support for those exploring rental income from single-family or multi-unit properties.

The outcome:

As the housing landscape evolves, house hacking emerges as a strategic solution for younger generations aiming to enter the real estate market. The flexibility and financial benefits associated with renting out parts of their homes appeal to Millennials and Gen Z, reflecting a shift in the traditional approach to homeownership. The trend not only addresses immediate financial concerns but also showcases the adaptability of the modern homebuyer in navigating the complexities of the housing market.

Defoes