Quarterly Market Update: New Census Estimates Point to a Decade of Robust Gen Z Demand in the Rental Market

Key Takeaways:

• Contrary to earlier data suggesting millennial dominance, new census figures show that the populations of millennials and Generation Z are nearly equal.

• This reassessment tilts the renter demographic toward younger adults, helps explain the rental market’s surprising resilience, and points to 10 more years of strong rental unit demand.

• To thrive in this environment, investors and operators must cater to Gen Z and digital-first renters who view resident services as a priority, turning the resident experience into a vital competitive advantage.

New Census Data Revises Away the Millennial Bulge

For over a decade, demographers at the U.S. Census Bureau identified 1990 or 1991 as the years when the largest number of Americans were born, but their findings suddenly shifted this year. The latest report on the American population in 2025 reveals that 25-year-olds, born in 2000, now account for the country’s largest age group. This cohort, which totals 4.9 million residents, is not only currently the most populous group in the United States but also stands as the largest single-year age group in American history (and more importantly for the real estate industry, it also represents the single largest pool of renters in the nation).

These latest insights might come as a surprise to analysts who routinely track the Census Bureau’s population research. As recently as last year, the Bureau estimated there were 4.6 million residents born in 2000 — a number that is 8% lower than the newly revised figures. This significant upward adjustment does not stem from a sudden increase in immigration among people in their 20s but rather from a methodological shift at the Census Bureau. Specifically, the Bureau has refined the way it models the ages of individuals who do not directly participate in its surveys.

The Bureau’s revised approach produced the increased count of residents in their mid-20s by reallocating population away from those in their mid-30s, previously thought to be America’s most populous age group. See Figure 1, which compares the U.S. population of residents in their 20s, 30s, and 40s; the darker line represents the 2025 distribution, while the lighter line graphs the previous 2024 estimates.

While previous reports indicated that the millennial population surpassed Generation Z by 3.4 million individuals — a 5% margin — the updated methodology reveals that the populations of the two generations are in fact nearly identical in size.

Sustained Demand Benefits Property Managers and Investors

These revised projections indicate that the residential rental market is set to benefit from a demographic tailwind. Current data shows that rental unit demand is likely to remain robust, which contradicts earlier forecasts predicting a loss of hundreds of thousands of rental households as millennials approach their 40s and transition to homeownership.

Figure 2 helps to illustrate this point. This graph measures the propensity to rent — the proportion of residents living in rental housing at different ages. This research shows that adults in their mid-20s are twice as likely to rent as those in their late 40s. By multiplying the propensity to rent by the initial 2024 population estimates and most recent 2025 revisions, we find that the housing market could contain 185,000 additional rental households. While this increase represents just a small fraction of the 50 million total rental units across the United States, its influence is notable because it effectively lowers the national rental vacancy rate by 0.4 percentage points.

The rental market’s surprising stability can be at least partially attributed to this newfound demand. Even though 2024 saw the highest number of new rental completions since 1974, the national vacancy rate only edged up slightly from 6.9% to 7.1% in 2025. The market’s unexpected strength can be traced to an influx of early-career professionals in their mid-20s entering the housing sector at levels that exceeded previous forecasts.

While earlier research suggested the U.S. population peaked among those in their mid-to-late 30s — a life stage when the propensity to rent drops below the U.S. average — updated estimates indicate a different trend. This year, the 26-year-old cohort is the largest in the nation, matching the age when the propensity to rent reaches its maximum. These market and demographic findings suggest that rental housing demand is nearing record heights. Furthermore, because the demographic center of gravity has migrated from home-buying millennials to lease-signing Gen Zers, this heightened demand should endure for the next decade.

Turning Demographic Demand Into Performance

The revised census data suggests rental demand may have more staying power than previously expected. If the Gen Z population is now roughly the same size as the millennial generation — and the country’s largest age cohorts are entering peak renting years — property managers and investors may be looking at a longer runway of demand from younger households than earlier projections suggested.

But this is not just a demand story. It is a performance story.

As more Gen Z renters enter the market, operators will need to compete not only on location and price but also on the quality, convenience, and transparency of the resident experience. The AppFolio 2026 Renter Preferences Report found that 39% of renters plan to move in the next 12 months, up from 35% the year prior. This reinforces the need for operators to focus on retention in a market where renters have more options.

That makes resident services a clear opportunity for differentiation. According to the report, 78% of residents say additional services included in their lease are an important factor when evaluating a new rental, yet only 33% currently have access to them. This 45-point gap suggests that many operators are still underdelivering on services that renters increasingly value, from renters insurance and group-rate internet to financial tools, rewards, and air filter delivery.

The demand is especially high among younger, digital-first renters. Gen Z residents expect the same seamless, mobile-first self-service and instant communication they experience in other aspects of their lives. In fact, 81% of Gen Z renters view additional services as important, and 86% are willing to pay for them, compared to 80% of residents overall.

For property managers, this raises the stakes around every aspect of the resident experience. The capabilities within FolioSpace are designed to help operators meet these rising expectations by providing access to high-value resident services while facilitating move-ins, payments, and communication all from one place for residents.

The Renter Preferences Report also makes clear that operational fundamentals remain central to retention. Residents who are satisfied with maintenance are more likely to renew or stay on their current lease, at 56% compared with 31% of those who are unsatisfied. Communication shows a similar pattern: 55% of residents satisfied with communication plan to renew or stay, compared with 38% of those who are unsatisfied.

In other words, demand alone will not guarantee performance. If the next decade brings a deeper pool of renters in their prime leasing years, the operators best positioned to benefit will be those who can convert demand into durable occupancy, stronger resident relationships, and more efficient operations.

Automation and AI will be critical to that equation. Higher renter demand can also mean higher lead volume, more service requests, more communication touchpoints, and more back-office complexity. AppFolio Realm-X Performers, including the Leasing Performer, are built to help teams automate repetitive workflows across leasing, maintenance, resident communication, and accounting so employees can spend less time managing manual tasks and more time on strategy, service quality, and portfolio performance.

Ultimately, the demographic tailwind is real, but it will not benefit every operator equally. Property managers that pair strong rental demand with a modern resident experience, transparent services, and scalable automation will be better positioned to turn this generational shift into sustained performance.