According to a recent survey by Intuit Credit Karma, a staggering 31% of Generation Z individuals in the United States are living with a parent or family member due to their inability to afford renting or buying their own homes. This data sheds light on the ongoing struggle to provide affordable housing in America, a problem that has become increasingly dire over the past few decades and has been exacerbated by the COVID-19 pandemic.

It's important to note that Generation Z includes individuals born between 1997 and 2012, ranging from 11 to 26 years of age. While it may not be surprising to find 11 and 12-year-olds living with family members, the survey focuses on those aged 18 and older who are capable of living independently.

The survey, along with other data, suggests that Generation Z is facing unique challenges when it comes to housing costs. In contrast to the low interest rates that benefited millennials at the start of the 2020s, the rising interest rates and skyrocketing housing prices have made it increasingly difficult for many Gen Zers to enter the housing market, especially as they graduate from school and embark on their careers.

Renting is also becoming less financially viable, with the typical American renter becoming rent burdened for the first time in 2022, meaning that 30% of the median income is now required to pay the average rent, as reported by Moody's Analytics. Although income growth slightly outpaced rent growth in 2023, the national rent-to-income ratio remains at 30%, indicating a significant affordability challenge for renters.

However, it's not just Gen Z that is struggling with these issues. The report highlights that among all U.S. adults who rent, 24% claim they can no longer afford their rent, forcing almost 40% to make sacrifices in essential areas to cover their housing expenses. Millennials and Gen Z are particularly affected, with 30% and 27%, respectively, struggling to pay their rent, compared to only 10% of those aged 69 and older.

The consequences of expensive rent extend beyond the financial strain on a daily basis, making it increasingly challenging for young adults to save for a future home. According to the Credit Karma survey, as many as 46% of Americans believe they will never be able to own a home, with factors such as mortgage rates and inflation contributing to this sentiment. As a result, the typical age of first-time homebuyers has reached a record high of 36 years old, a decade older than the oldest Gen Zers.

This delay in homeownership for Generation Z means that more individuals within this demographic are renting for longer periods, even as rental costs continue to rise. Consequently, it is not surprising that a considerable number of them are choosing to stay with their parents. This trend started during the Great Recession and further increased in the midst of the pandemic. In fact, a Zillow analysis revealed that around 2.7 million adults in the U.S. moved in with a parent or grandparent in March and April 2020. Additionally, U.S. Census Bureau data shows that the percentage of young adults living at home has increased by over 87% over the past two decades, further highlighting the impact of the affordability crisis on housing independence.

Furthermore, when Generation Z individuals are able to make the leap to independent living, many rely on financial support from their families. A recent Redfin survey noted that 40% of buyers under 30 receive assistance from their families to afford a down payment. Similarly, the Credit Karma survey found that 30% of Gen Z and 39% of millennials depend on financial assistance from their families to purchase a home.

The difficulties faced by Generation Z in achieving housing independence highlight the urgent need for comprehensive solutions to address the affordability crisis in the United States. With increasing housing prices, limited supply, and rising rental costs, young adults are finding it increasingly challenging to secure their own homes. As policymakers and stakeholders strive to find solutions, it is essential to ensure that affordable housing options are made accessible to all generations, including Generation Z, to support their financial well-being and future prospects.