It’s a bad time to buy a house. Prices are continuing to soar, while mortgage rates have reached record highs, preventing younger generations from becoming homeowners.
As a result, home sales have hit a new low. With the current housing market looking so bleak, millennials and Gen Zers have turned to “house hacking” as a way of producing additional income.
This practice involves renting out part of a home while living in it, so the extra money can be used to help contribute to the mortgage.
A recent report from the housing market site Zillow has found that more than half of millennial and Gen Z homebuyers believe that house hacking is an extremely important opportunity, which marks an increase of eight percentage points over the past two years.
“Younger homebuyers—mostly Gen Z and millennials—are especially into the idea of rental income as a key factor in their home buying decisions,” said Manny Garcia, a senior population scientist at Zillow.
He added that a regular nine-to-five job may no longer be enough for first-time buyers to be able to afford a house and that many are being forced to take up “side hustles.” Rental income can provide a bit of a boost with the monthly mortgage payments.
In October, the median sale price for a house in the U.S. climbed to $413,874, which is up 3.5 percent from last year. Additionally, the average 30-year mortgage rate rose to eight percent, the highest it has ever been in 23 years.
The affordability crisis has also had a profound impact on households of color in particular. According to Zillow, Latinx homebuyers are more likely to rent out a portion of their homes than any other racial group.
Among Latinx buyers, 51 percent were interested in house hacking compared to 46 percent of Black buyers and 40 percent of white buyers.