Millennials and Gen Z aren’t just the future of the rental market, they are the market. Together, they account for nearly 65% of renters in the U.S. (NMHC), and by 2030 they are projected to represent close to three quarters of the rental pool as homeownership affordability continues to decline. For real estate investors, this generational shift is more than a demographic statistic. It’s a roadmap for shaping portfolios that maximize occupancy, rental premiums, and long term asset performance.
Why Generational Trends Matter
- Millennials (27-42 years old): Many remain priced out of homeownership, with the median home price to income ratio at 5.5x in 2024, far above the historic average of 3.5x (Fed Data).
- Gen Z (18-26 years old): They are entering the rental market in record numbers, driving demand for smaller units, suburban flexibility, and “tech forward” communities.
Ignoring these trends risks falling behind as other investors move to meet the expectations of today’s dominant renter classes.
1. Tech Forward Properties Command Premiums
- 78% of renters under 35 consider smart-home technology a key factor in choosing housing (NMHC 2024 Renter Preferences Survey).
- Apartments with smart features, such as thermostats, access control, and energy management, command 2-5% higher rents and lease faster.
- By 2030, the global smart-home market is expected to reach $222 billion (Statista), with multifamily and single family rentals playing a large role in adoption.
What You Can Do Today:
- Use ENERGY STAR Smart Home Systems to benchmark options for upgrades.
- Start with cost-effective investments: smart locks ($150-$250 per unit) or thermostats ($200-$300) deliver immediate tenant value and reduce energy costs.
2. Affordability Is King
- 70% of renters under 35 rank affordability over luxury (NMHC).
- Class B multifamily assets currently maintain 95-97% occupancy nationwide (Moody’s CRE), compared to some Class A markets struggling with overbuilding and concessions.
- Rent growth in workforce housing outperformed luxury in 2024, growing at 4.8% vs. 2.1% (CoStar).
What You Can Do Today:
- Use the NMHC Renter Preferences Survey to identify upgrades that matter most to tenants.
- Focus on cost saving amenities: energy efficient appliances, water-saving fixtures, and insulation upgrades, all inexpensive improvements that drive NOI and appeal to price sensitive renters.
3. Secondary Markets Are Where Growth Lives
- In 2024, metros like Columbus, Raleigh, and Indianapolis saw rent growth of 5-7%, outpacing New York, San Francisco, and Los Angeles (Zillow, Moody’s CRE).
- These cities also saw population growth of 1.5-2% annually, compared to flat or declining growth in many coastal metros (Census Bureau).
- Demand from remote and hybrid workers continues to funnel into affordable, mid sized metros where quality of life is balanced with lower costs.
What You Can Do Today:
- Use NMHC’s Quick Facts Data Portal to evaluate migration and rental growth by region.
- Target submarkets near universities, hospitals, and logistics hubs, which consistently drive stable rental demand in these rising metros.
The Takeaway
Millennials and Gen Z are shaping the rental market for the next decade. By aligning your portfolio with what they demand, smart technology, affordability, and secondary market growth, you can capture higher occupancy, premium rents, and more resilient long-term value.
These aren’t abstract trends. They’re data backed realities with clear steps you can act on today:
- Upgrade units with affordable smart technology.
- Reinvest in efficiency focused improvements that renters value most.
- Follow population and job growth into secondary markets where demand is strongest.
The investors who take action now will be best positioned to capture the next cycle of multifamily and single family rental growth.
