Millennials Spend About 45 Percent Of Income On Rent Before Age 30

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Millennials Spend About 45 Percent Of Income On Rent Before Age 30

A new study based on Census data shows that millennials spend about 45 percent of their income on rent before reaching the age of 30, according to Rent Café.

The cost of renting is a huge subject nowadays and a big expense as well, arguably the biggest it’s ever been. People in their 20s starting a life on their own have always faced a lot of challenges. Besides having a low income because of limited work experience, leaving home and paying rent make things even harder, according to Rent Café.

“Analyzing Census data going as far back as 1974, we discovered that rent burden followed an ascending trend over time, making millennials the hardest hit generation. But the future doesn't look too bright for Generation Z either,” the company said in a release.

Here are more key findings on millennials and rent

  • Millennials pay a whopping $92,600 in total rent by the time they turn 30. Although they earn more compared to previous generations, they also have to spend more on rent.  

  • By the time Millennials might be thinking about buying a home or starting a family, they are struggling with rent and student loan debt instead. Compared to Baby Boomers (36%) and Generation X (41%), Millennials have to cope with a 45% rent burden in their 20s. 
  • Because of the ever-increasing rents, discrepancies appeared within the same generation as well. With a rent burden of 47%, younger Millennials (20 - 29) surpass older Millennials who spent about 44% of their income on rent between the ages of 22 and 30. 
  • If this trend continues, Gen Z-ers are expected to pay something in the vicinity of $102,000 while in their 20's just to put a rented roof over their head. 

Millennials Spend About 45 Percent Of Income On Rent Before Age 30

Summary:

 Given their overwhelming student loan debt, younger millennials may carry on renting, simply because the prospect of buying is not yet attainable. On the other hand, older Millennials are starting to slowly shift towards home ownership. As they are finally catching up with the American Dream, this will surely drive demand for homes for sale. Their lifestyle patterns so far show that Millennials need affordable homes with attractive amenities. As they’re starting to form families, they’ll soon be ready to put their hard-earned money into their own home.

Methodology:

  • RENTCafé is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the United States.
  • Using the most recent Census data, our research team analyzed the rents and incomes across the United States during certain time periods. Relevant income data was available starting with 1974 while rent data was available starting with 1940. The income amounts represent the median gross income per capita and the rental amounts represent the historical median gross rents. The data was adjusted to 2017 prices, using a cumulative rate of inflation for each year.
  • We based the total income on the following age brackets provided by Census: ages 15 to 24 and ages 25 to 34.
  • We used the following year-of-birth ranges for each generation: Baby-Boomers – born between 1946 and 1964, Gen Xers – born between 1965 and 1976, Millennials – born between 1977 and 1995 and the Gen Z generation – born starting with 1996.
  • We added up the data from an 8-year period for each generation (for the years they were aged 22 to and including 29), we calculated the median amount of money that each generation spent on rent and the median income they earned during the same period. The final data presented in this study was obtained by rounding up the numbers to the nearest hundred.
  • The study refers only to single people paying the average monthly rent on their own.

 

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