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As more Millennials seek out homeownership, long-term real estate investors will have to appeal to a new generation of renters. In 2021, Gen Z was the only generation with an increase in rental applications. Born between 1997 and 2012, the oldest of this generation are graduating college, starting careers, and establishing independence.
With recent survey findings, their renting preferences are beginning to emerge.
If you want to appeal to the largest growing segment of renters, don’t assume they’ll follow the same trends as generations before them. Gen Z is young, but they are one of the most tech-savvy and culturally diverse demographics. Their preferences for property types, location, and amenities may surprise you.
Conventional wisdom assumes that younger renters will be drawn to the cities in droves. While they are playing a big role in the post-pandemic urban revival, evidence shows Gen Z isn’t as interested in the big city, small apartment lifestyle.
Previously, millennials looking to live in homes with more space and highly-rated school districts have been significant drivers of the growth in build-to-rent (BTR) and single-family rental (SFR) asset classes. Saddled with student loan debt and priced out of the current market, many millennials continue to rent.
It appears that the next generation will continue to support that growth for similar reasons. However, Gen Z has a more positive and universal outlook on eventual homeownership. Eighty-seven percent have aspirations to own one day compared to only 63% of millennials.
While this generation may not have the money to purchase their first home right now, a good percentage of them want to rent single-family homes. When the National Apartment Association surveyed 18 to 23-year-old apartment residents, 43% said they would like to live in a detached single-family house after graduation.
Looking to expand your real estate investment portfolio with SFR? Request a demo to see how Blueprint can help.
In the same survey, the majority preferred the suburbs over the city. Forty-four percent said they wish to live in “vibrant suburbs,” and 29% said they would rather live in “quiet suburbs.” Only 23% said they want to move to a city.
Another survey from realtor.com found that over half (51%) of Gen Z lives in suburban areas and prefers them to downtown urban locations. It’s where a close majority (49%) also plan to buy their first house.
Today’s hybrid work environment offers more flexibility to this generation, but location is still a major factor in deciding where to rent. Proximity to work or school is high on the list, with 36% prioritizing it, followed by 22% saying that a location close to entertainment, dining, shopping, and the gym is a bigger influence.
When it comes to amenities, this generation is driven, in part, to pick communities and properties that reflect their values:
Gen Z is taking a lesson from the millennials who traded in homeownership’s stability and wealth-building opportunity for the thrill of big city living. According to realtor.com’s Senior Economist George Ratiu, this generation “already sees the financial benefits of investing in real estate. Given how young they are, this level of financial maturity is applaudable.” Today’s apartment prices in cities aren’t keeping pace with wages, so more young people today are choosing the affordable options outside of city centers.
For now, renting is a must as they continue to establish themselves in their careers, but Gen Z plans to buy their first homes soon. While millennials have been late to buy their first homes, 43% of Gen Zers anticipate purchasing a home in the next five years, and 45% are already saving for it.
Fortunately, there’s an opportunity to build, purchase, and remodel single-family homes that appeal to these young renters. Planned suburban communities today offer many of the vibrancy of bigger cities with the nightlife, and other conveniences Gen Z renters crave.
As the demand for single-family rentals increases among this generation, investors and builders have an opportunity to demonstrate how their properties meet their needs and desires.
Blueprint offers a title and closing platform designed for professionals who build, buy, and sell this asset class. Our centralized platform allows users to submit, track, and close deals efficiently. Keep everyone involved in the transaction in the loop by adding business collaborators and other parties. You can upload and sign documents electronically online, view transaction milestones, and schedule convenient closings with remote online notarization or mobile loan signing options.
With operations in 21 states and counting, expanding your business across state lines is easier with Blueprint than your traditional title and closing company. Request a demo to learn more.
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