How Gen Z Is Influencing Real Estate Development In Today’s America

Rising costs in housing delivers creative solutions for Gen Z.

Gen Z is facing a new challenge and opportunity. While there is a shortage of affordable housing for Gen Z, this challenge also presents an opportunity for creative investors willing to accommodate their needs.

With fewer young adults today deciding to pursue a college degree, especially men, for financial and practical reasons, this decision directly affects the income they earn and their ability to afford their own living space.

“A majority of young adults living with a parent say the arrangement is good for their finances, but they’re less enthusiastic about its impact on their social life,” said Richard Fry, a senior economist at Pew Research Center with Multi-Housing News.

Gen Z can’t afford the rent, as many young adults either live at home with their parents, a romantic partner, or a housemate for economic reasons, rising housing costs, limited earning power, and Gen Z’s hiring crisis make living alone increasingly unattainable.

As a result, Gen Z is slowly stepping into adulthood, with delays in marriage, setting up independent households, and starting families.

“Today’s 25-year-olds are significantly behind 25-year-olds of 40 years ago,” Fry said. “They have a different lifestyle.”

Gen Z prioritizes luxury, e-commerce, wellness and beauty, and pets, while also being deeply invested in media, gaming, and big tech, pouring their funds into some or all of these areas, from the high cost of living and education costs, to essentials, small luxuries, and even spoiling their pets. 

Affordability today is less about cutting amenities or added expenses and more about building smarter and cheaper without compromising one’s comfort, functionality, or quality of life.

In response, the need to make housing more affordable for young adults is driving developers to have creative designs, unit sizes, and leasing options to meet the needs of young adults.

“We continue to see a strong emphasis on dual-bedroom layouts, particularly in two-bedroom units, where roommates have equal bedroom size, storage, and bathroom access, said Dwight Dunton, founder, CEO & CIO of Bonaventure, a multifamily housing investor, developer, and operator with Multi-Housing News.

While developers may shrink unit sizes, they are creating spaces for residents to have access to shared fitness studios, co-working spaces, lounges, or community rooms, keeping rents more attainable without sacrificing quality of living. Instead, they focus on authenticity, community, and social interaction. 

While developing smaller and affordable units is just a small part of the solution to affordable housing for young adults, the bigger challenge is the high cost of producing housing that influences developers to look for lower-cost land, alternative construction methods, or undeveloped land where per unit costs can be lower.

While challenges remain, creative designs, flexible layouts, and community focused housing will soon help provide Gen Z a path to affordable, functional housing and a good quality of life.