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Rising inventory is helping push rent prices down. For young adults, building credit is a smart step to take as they prepare to enter the rental housing market.
The median U.S. asking rent price in December was $1,964, a 0.8% decline from a year ago, according to real estate firm Redfin, which analyzed price data on single-family homes, multifamily units, condos/co-ops and townhouses across the U.S., except metro areas. It was the third consecutive decline after a 2.1% annual drop in November and a 0.3% decrease in October.
“It is good news for Gen Z that there are more rental options at more affordable prices,” said Daryl Fairweather, chief economist at Redfin.
While prices are moderately cooling in the rental sector, there is still a long way to go before the real estate market sees consistent and significant price decreases, according to Jacob Channel, a senior economist at LendingTree.
“It’s probably still going to be hard to rent in a lot of instances, unfortunately,” he said.
While some older Gen Zers were able to become homeowners during the Covid-19 pandemic, most did not. They either became renters or never moved out of their parents’ house.
Gen Z includes those born between 1996 and 2012, according to Pew Research Center’s definition, and the youngest members of that cohort are still teens and tweens.
Nearly a third, 31%, of adult Gen Zers live at home with parents or a family member because they can’t afford to buy or rent their own place, a recent report by Intuit Credit Karma found.
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Some of those who did rent are now struggling. Of the Gen Z adults who currently rent, 27% say they can no longer afford the cost, the firm found. It polled 1,249 U.S. adults in November.
“The high cost of housing, even as it comes down in some areas, is going to remain a problem for both buyers and renters for quite some time,” said Channel.
In the meantime, there are ways Gen Z adults can prepare, especially those at home saving on expenses.
Landlords may look at prospective tenants’ credit to assess their ability to make payments on time. Having a good track record with credit can boost your chances that your application is accepted, and with favorable terms.
In short: A strong credit history can make you a competitive candidate.
“Practice healthy habits overall with any line of credit that you may have,” said Melissa Lambarena, credit card expert at NerdWallet. “Whatever you’re charging to your credit card, you should only charge what you can afford to pay back.”
Whether you are on the rental market sidelines or have your eyes set on the ideal apartment in your area, here are three ways to strengthen…