In the face of soaring housing costs, a growing number of young homebuyers, primarily millennials and Gen Z, are embracing the concept of "house hacking." This trend involves renting out a portion or the entirety of their homes to generate additional income.
According to a recent Zillow survey, 55% of Millennial and 51% of Gen Z buyers consider the opportunity to rent out part of their home for extra income to be very or extremely important when making home purchase decisions. This house hacking trend is not limited to the younger generation, as 39% of all homebuyers also find the prospect appealing—a notable eight-percentage-point increase over the past two years.
Additionally, Zillow's 2023 Consumer Housing Trends Report (CHTR) highlights that more than half of millennial (59%) and Gen Z (54%) buyers believe it is highly important to be able to rent out their entire home in the future, compared to 43% of all buyers.
"Younger homebuyers — mostly Gen Z and millennials — are especially into the idea of rental income as a key factor in their home-buying decisions," said Zillow senior population scientist Manny Garcia. "For those first-time buyers navigating the 'side hustle culture,' where a regular 9-to-5 might not quite cut it for homeownership dreams, rental income can step in to help with mortgage qualification and smoothing out those monthly payments."
The survey results also underscore the disproportionate impact of the affordability crisis on households of color. Latino homebuyers, in particular, prioritize the potential for rental income at a higher rate compared to other racial groups. Among Latino 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.
The trend was already evident months ago. Check out Katie Jensen's report in Mortgage Banker Magazine.