As Generation Z begins to enter the workforce, its overall preference for urban living could continue the trend toward multi-family housing in cities.

It’s a quintessentially American story: Young person seeks education, then moves to the big city looking for work. Despite how times have changed, data shows this trend—that young people want to live in cities—is holding strong. As Generation Z begins to graduate college,1 they are joining young millennials in urban areas.2 That means the demand for multi-family homes that’s taken hold in cities is likely to continue.

Who is the next generation?

Because Generation Z (Gen Z for short) is still largely underage—they’re born between roughly 1997 and 2015—most studies of their habits examine teens and college students, as well as the habits of younger millennials (also known as Gen Y), the generation that spans 1981 and 1996.1

This younger generation is shaped by its circumstances: They’ve never lived without the internet, for example.1 They were also children during the 2007 housing crisis, meaning many grew up with the threat of eviction, which could affect how they view homeownership.3

This may be one reason this younger generation is so financially aware. They’re very focused on education, for instance, but are also highly aware of the cost. While 60 percent are taking out student loans, according to data from the American Bankers Association,4 a separate study shows 88 percent chose a major with their earning potential in mind.5

What does this mean for housing?

Post graduation, this younger generation is moving to urban areas. The numbers that illustrate this are perhaps most striking not in urban areas, but in rural. Just 13 percent of Gen Z are in rural areas right now.2 In many ways, this shows that Gen Z is continuing a trend. Millennials—the youngest of whom are just hitting their mid-twenties—are 88 percent urban.6

So far, housing and construction reflect this: More people want to live in cities, but cities have little room to grow, leading to a jump in multi-family units starting in 2006, when the oldest millennials first started graduating college.7

From 2006 to 2018, more than 75 percent of new housing permits issued in New York City were for multi-family units. In Boston, the number is near 60 percent, and in Denver and Chicago it’s close to 48 percent.7

Researchers from MIT’s Center for Real Estate8 forecast that this will continue, but perhaps with a slight twist. They expect a potential shift from new construction toward projects that reuse existing spaces.

Their researchers note: “Adaptive reuse will continue to be a valuable addition to the developer toolbox. … These projects have numerous advantages besides leveraging underused structures.”8 They point out, for example, that this younger generation is less likely to use cars, meaning parking garages in cities might be repurposed to housing developments.8

Rent versus buy?

Just because Gen Z is moving to the city, where they’re likely to encounter multi-unit homes, doesn’t mean they prefer renting to homeownership. Surveys by the National Association of Realtors show Gen Z is extremely interested in homeownership—a full 96 percent say they expected to own a home in the future.9 Only a small percentage of this younger generation (4 percent of Gen Z and 5 percent of Gen Y) say they are sure they do not want to own a home.

When it’s time for them to apply, it’s likely they’ll have saved for a down payment9 and expect to apply for their mortgage via smartphone.10

Although multi-unit residential buildings continue to grow in interest for Gen Z and Gen Y, these groups are still cost sensitive. It’s important for developers and real estate investors to understand how unique property and liability exposures affect insurance costs, the increased levels of risk and how to appropriately protect against them.

A hardening insurance market is already putting upward pressure on insurance costs, so safety and prevention are essential to avoiding claims, which would further increase rates. In addition, changes to “catastrophic” designations should be closely monitored, particularly flood designations, as they would directly impact insurance costs and available coverage. These considerations, paired with a hardening commercial insurance market, require an experienced insurance partner with a focus in real estate.

How can you plan ahead?

This article focuses on older Gen Z and younger Gen Y, since the younger generation coming of age today crosses a generational divide. Still, researchers tend to focus on preset groups, meaning data about millennials often combines people in their mid-twenties with those in their late thirties. And remember, the youngest members of Gen Z are still just kids in 2019.

Homing in on the youngest generation often means reading the fine print for how researchers survey recipients and how data is tallied. The evidence gathered here should give you a good indication for how young people are thinking about their life and homeownership going forward.

This young generation is educated and financially aware. Like generations before them, they want to move to cities, but cities are becoming more populous than ever. The housing they encounter there, and how they interact with it, will largely depend on how developers deal with these various realities. While the trend of multi-family homes is likely to continue—and thrive—in cities, what exactly these new homes look like remains to be seen.

Want to learn more?

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1 “Defining Generations: Where Millennials End and Generation Z Begins,” Pew Research Center, January 17, 2019,

2 “Early Benchmarks Show ‘Post-Millennials’ on Track to Be Most Diverse, Best-Educated Generation Yet,” Pew Research Center, November 15, 2018,

3 “How the foreclosure crisis shaped Gen Z,” PS Magazine, April 2019,

4 “How Generation Z is changing financial services,” ABA Banking Journal, January 2019,

5 “Gen Z grades: digital, driven, dedicated,” Accenture, 2017,

6 “How Millennials Compare with Their Grandparents 50 Years Ago,” Pew Research Center, 2018,

7 “The cities where job growth is outpacing new homes,” CityLab, September 2019,

8 “Real estate market in flux,” MIT’s Center for Real Estate sponsored by Capital One,

9 “Zealous Gen Z: Saving early to be homeowners by 25,”, November 2018,

10 “iGen tech disruption,” The Center for Generational Kinetics, 2016,

This content is for informational purposes only. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. Please consult with the professionals of your choice to discuss your situation.