(TND) — Over half of young homebuyers might be looking for a roommate or tenant to help them swing their hefty mortgage payments.
Zillow says its recent research shows a surge in so-called “house hacking” – renting out part or all of your home for extra cash.
And house hacking is especially popular with Gen Z and millennial buyers.
Overall, 39% of “successful buyers” surveyed by Zillow say that it’s important to have the opportunity to rent out part of their home for extra income while living in it.
But that share jumps to 51% for Gen Z buyers (ages 18-28) and 55% for millennials (ages 29-43).
“Younger homebuyers … are especially into the idea of rental income as a key factor in their home buying decisions,” Zillow senior population scientist Manny Garcia said in a news release.
“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,” he said.
The share drops to 36% for Gen X (ages 44-58). And just 4% of boomers and older Americans care about the rental income from their primary residence.
The overall interest in house hacking, 39%, is up 15 percentage points compared to before the pandemic.
Zillow also found that 43% of all buyers care about the opportunity to rent out their entire home in the future to generate income.
High prices and mortgage rates are keeping buyers on the sidelines.
And renting out rooms isn’t the only way young buyers are looking to make homeownership a reality.
The National Association of Realtors released its flagship report this week that profiles buyers and sellers, and it found that more first-time buyers are cashing in investments, such as stocks or their 401k, in order to finance the purchase of a home.
The median existing-home sales price has shot up 45% since before the pandemic.
NAR’s latest data shows the median price in September was $394,300, compared to $271,500 in September 2019.
October figures will be released next week.
Meanwhile, mortgage rates have risen to 20-year highs.
Freddie Mac says the national average for a 30-year fixed-rate mortgage is 7.44%.
A buyer could’ve locked in a 2.65% mortgage rate in January 2021.
The cost difference just from the higher mortgage rates is nearly $1,000 a month on a typically priced home, NAR economist and researcher Jessica Lautz previously told The National Desk.
NAR also found that over the last year, the incomes of typical buyers shot up dramatically.
The median household income for homebuyers jumped to $107,000 from $88,000.
The difference in income for first-time buyers was even more dramatic: nearly $25,000 above last year.
This isn’t simply the same group of first-time buyers with fatter paychecks.
Folks “need to be wealthier to be able to enter into the housing market,” Lautz said.
Add in financial stressors outside of the housing market, such as student loan repayments and rising child care costs, and it’s gotten much more difficult to save up for a down payment, she said.
The typical down payment for first-time buyers is now the highest since 1997, NAR said.
Home sales will likely decline by 18% this year, compounding a 17% reduction last year, according to NAR.
People with locked-in lower mortgage rates aren’t selling as often, and that’s constraining inventory and sales volume.
But NAR Chief Economist Lawrence Yun forecasts existing home sales will rise by 15% next year.
And he said this week that mortgage rates have likely peaked, and they’re likely to drop below 7% by the busy spring buying season.