Rent drains Millennial generation
If Millennials needed more reason to join the housing market, RENTCafe has just offered it. According to a new study from the apartment listing site, the average Millennial will spend a shocking $93,000 in rent costs by the time they’re 30.
The over-paying generation
RENTCafe recently looked at U.S. Census data, Millennial incomes and average rent costs to determine just how much this up-and-coming generation is paying in rent. And according to the finding? They pay nearly $100K by age 30.
“Millennials do carry the weight of a very heavy rent burden and pay a ton of money on rent,” RENTCafe’s Florentina Sarac wrote. “Millennials 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.”
The study showed that Generation Xers paid just $82K in rent by age 30, while Baby Boomers paid $71K over the same time period.
Fortunately, Millennials have the benefit of higher incomes. According to the analysis, from age 22 to 30, they make about $206,000, compared to Gen Xers’ $202,000 and Boomers’ $195,000.
Almost half of Millennials’ income in that period that goes toward rent. Generation Xers paid about 41 percent of their income in rent, while Baby Boomers paid just 36 percent.
The study also showed that younger Millennials pay more than older ones. Millennials aged 22 to 29 will pay $97,400 by age 30, while those 30 to 40 paid $90,500.
According to study, there are several reasons Millennials are so rent-burdened. One is increased student loan debt.
“Besides the heavy rent burden, there are several other reasons why Millennials witness such big financial challenges,” Sarac wrote. “One of them is the ever-increasing student loan debt, which many economists blame as the reason Millennials aren’t able to buy homes.”
Millennial spending habits – particularly on non-essential items like Starbucks, Uber and eating out – could also play a role. Renting longer has also impacted the total spent on rent.
“The two demographics [older and younger Millennials] were impacted by both the recession and social factors in a way that pushed them to rent longer than any other previous generation,” Sarac wrote.
Get out of the rent race
With mortgage rates at historical lows, it’s a great time to get out of the rent race. Shop around and see what rates you qualify for today.