New report shows San Jose, San Francisco are country’s most expensive rental markets

by Linda Taaffe June 11, 2024

Gen Z renters living in the Bay Area are on track to spend up to $300,000 in rent by the time they reach age 30. 

If that sounds like a lot, it is. That amount is about double what the average Gen Z renter nationwide will spend, according to a new study by RentCafe that looks at how much this generation will pay for housing during the eight-year span from age 22 to 29 compared to what their Millennial predecessors paid during the same time frame when they were that age. 

The metro areas in the country where Gen Z faces the highest costs are in California – and San Jose and San Francisco top the list. They are the only markets in the nation where Gen Zers, the generation that includes those born roughly between 1994 and 2000, will spend a total of more than $250,000 on rent by age 30. 

They will pay $296,092 on average in San Jose (26% more than Millennials paid) and $286,697 in San Francisco (31% more compared to Millennials), according to the study. 

San Diego, Los Angeles, Santa Rosa and Santa Barbara are among the 10 cities nationwide where these young renters can expect to pay more than $200,000 in rent. In all other areas of the nation, Gen Z renters can expect to spend below $200,000, according to the report.

To determine the average amount of money that Gen Z can expect to spend on housing during their 20s compared to Millennials (those born roughly between 1981 and 1996), RentCafe looked at historical housing costs and earning and spending patterns in nearly 200 metro areas across the nation.  

 Higher rent, higher incomes

While the report reveals that Gen Z will spend more for rent than the previous generation, it also shows that they earn more, too.

The average Gen Zer earns a total of $550,000 in their 20s, or 14% more than Millennials did before turning 30, according to the report. In San Jose, Gen Zers earn close to $1.3 million in their 20s, the highest average in the nation, followed by San Francisco, where they earn $1.16 million, according to the report. These are the only two metro areas where Gen Z salaries average $1 million or higher, according to the report. 

Despite today’s higher rental costs, the report reveals that Millennials spent the same share of their income (27%) on rent as those currently between the ages of 22 and 29 because Gen Z’s wages are higher. In comparison, the average Millennial paid a total of $126,000 for rent ($18,000 less) and earned about $70,000 less in their 20s ($480,000) compared to Gen Z. 

In Silicon Valley, however, rent costs and salaries were relatively the same for Millennials as they are for Gen Z. In San Jose, Millennials paid up to $235,000 in rent on average by the time they turned 30. In San Francisco, they paid $218,000. Like Gen Z, Millennials in the San Jose metro area grossed more than $1 million by the time they reached 30.

Renting vs. buying

Renting is a no-brainer for Gen Zers younger than 30 in West Coast cities like San Jose due to high owning costs, the report states.

San Jose tops the list of locations with the biggest differences between owning and renting costs for Gen Zers younger than 30. Homeownership will cost nearly $171,000 more compared to renting — by far the largest amount on the list, the report states. 

A Gen Z renter in San Jose will spend 23.7% of their income on housing by the time they reach 30 as compared to a Gen Z homeowner, who will need 37.4% of their wages for their mortgage payment, home insurance, real estate taxes and more, the report states. This amount does not include the cost of a down payment.

In San Francisco, where homeownership costs are about $371,077, Gen Z can expect to pay about 31.2% of their income (or about $84,380 more) to own a home than to rent by the time they turn 30.  

In Los Angeles, owning a home would consume nearly half of this generation’s salary (47.3% — the largest share among the top 10 metros with higher homeownership costs). Gen Zers here can expect to pay $105,102 more to own a home than to rent. While housing costs are below San Francisco and San Jose, the disparity between income ($692,04) and owning ($326,856) is much larger in L.A. 

Good news for Gen Z homebuyers 

Despite higher housing costs, the report concludes that there’s good news for Gen Z: The gap between renting and owning is smaller than it was for Millennials, while incomes are higher. Essentially, the average Gen Z owner will fork out an extra $21,000 compared to those who rent by the time they celebrate their 30th birthday — a 14% difference, the report states. Millennials, in comparison, faced a much steeper difference, with the average owner forking out an extra $46,000, or 36% more, than their peers who rented. In comparison, the average Millennial spent $172,000 – nearly $7,000 more than what Gen Z will pay – on homeownership costs during the same 8-year span when they were 22-29. 

Renting expenses for Gen Z also are below the 30% threshold in almost all of the metros in the report’s top 10, with the exception of Los Angeles (32.1%) and San Diego (32.8%).

The report concluded that Gen Zers are buying homes at a faster rate compared to other generations as more than one-quarter of them are already settled down in their own house. 

This report originally appeared on