Millennials Spend About $93,000 on Rent by The Time They Hit 30

As post-graduate millennials struggle to earn enough money to pay off their student loans, start families and perhaps even start saving for retirement, the “generation of renters” (not including parental basement-dwellers) spends nearly $100,000 on rent by the age of 30 according to a study by Rent Café – around 45% of their income

Key findings: 

  • 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.

With a rent burden of 45%, Millennials pay $92,600 in total rent

Millennials – whose baby boomer parents seem clueless as to why it’s so difficult for their children and grandchildren to get ahead, pay a whopping $92,600 in total rent by the time they turn 30, more than what their Baby Boomer parents paid by the time they hit the same age. It seems that Millennials do put a massive amount of money into renting, but the numbers also show that their total median income is the highest among generations, earning about $206,600 in 8 years.

The difference, however, is that Boomers were able to get away with spending far less of their income on rent vs. the generations which came after – as inflation has significantly eroded purchasing power while wages have struggled to keep up. 

To that end, Rent Cafe notes that millennials spend 45% of this income on rent between the ages of 22 and 30, which is more than the recommended 30%. In fact, none of the two previous generations managed to keep the rent burden under 30% with Gen Xers witnessing a rent burden of 41% and Baby Boomers of 36%.

Both Gen Xers and Baby Boomers made less money than Millennials but they also spent less on rent. Gen Xers spent a total of $82,200 on rent when they were in their 20s, and they earned about $202,100. The same is true for Baby Boomers as they earned $195,700 while $71,000 of that went towards rent.

Besides the heavy rent burden, there are several other reasons why Millennials witness such big financial challenges. One of them is the ever-increasing student loan debt, which many economists blame as the reason Millennials aren’t able to buy homes. Millennials do make more money than any other generation before them, but they’re also said to be spending more on things that are not necessarily essential, like Uber rides, pricey coffee or eating out. At the same time, spending habits depend very much on where they live, and as many Millennials prefer urban areas and big cities, this can only result in higher costs.

Millennials earn and spend more on rent than any previous generation

With a total of $92,600 spent on rent before hitting 30, Millennials pay a striking $21,600 more than what Baby Boomers paid during the same 8-year period. At the same time, Millennials boast a total income of $206,600, almost $10,900 more than the $195,700 that Baby Boomers earned between the ages of 22 and 30. It’s worth noting that the rent difference between Millennials and Baby Boomers is twice as big as the income difference.

What about Gen Xers? They had an income of $202,100, about $4,500 lower than that of Millennials. Some might say that compared to Gen Xers, Millennials have had it easier so far. Given the fact that Gen Xers were in their 30s and 40s when the U.S. housing market crashed in 2008, most of them witnessed the full force of the aftermath. As a result, many were no longer able to buy and were forced to turn to renting. However, if we compare the rental amounts paid by Gen Xers and Millennials between the age of 22 and 30, we’ll notice that the latter paid $10,400 more on rent. An explanation for this could be the average rents that have gone up since the housing crisis.

Younger Millennials pay more rent than older Millennials

Our analysis also found that younger Millennials, now aged between 22 and 29 years old, have had to pay a larger amount of money on rent than older Millennials, now aged 30 to 40. Younger Millennials are paying a median rent of $97,400 before turning 30, while older Millennials paid about $90,500, almost $7,000 less than younger Millennials. The two demographics were impacted by both the recession and social factors in a way that pushed them to rent longer than any other previous generation.

As far as the rent burden goes, there’s a visible difference between younger Millennials and older Millennials. With a rent burden of 47% between the ages of 22 and 30, younger Millennials surpass older Millennials who spent about 44% of their income on rent during the same period of time. The high rent burden carried by younger Millennials is mostly due to the increase in the median rent paid. While it’s true that their income was $3,400 higher than that of older Millennials, they also paid $6,900 more in rent.

As Gen Zers are starting to look for their very first apartments, they are bound to bring about some changes in the housing market. We’re talking about a highly visual cohort, which was born and grew up in the internet era. Although not very different from Millennials, Gen Zers are more tech savvy and highly reliant on technology. As a result, their future homes will have to meet their technological needs. Expected to be a more sedentary generation, industry experts say that they will no longer require amenities like swimming pools or fitness centers but computer labs and game rooms. Technological updates are likely to drive monthly rents further up, therefore Gen Zers should expect to pay more in order to get more.

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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