As rent prices continue to rise, a new study shows Millennials are paying about 45% of their total income toward rent, and pay out close to $100,000 toward rent before they turn 30.
Analyzing U.S. Census Bureau data going back as far as 1974, a new study from RentCafé found that Millennials have been the hardest generation for those ages 22 to 30. And the future does not look bright for Generation Z.
As it turns out, Millennials pay about $92,600 in rent by the time they turn 30. While they may earn more in income compared to previous generations, they also have to spend more on rent, the study showed.
During that same age span, from 22 to 30, Gen Xers paid an average $82,200 and Baby Boomers paid about $71,000 on total earned income of $202,100 and $195,700, respectively.
While Baby Boomers paid just 36% of their income toward rent while in their 20s, Gen Xers paid 41% and Millennials now pay 45% of their monthly income toward rent.
If this trend continues, Generation Z is expected to have to pay around $102,000 in rent during their 20s.
Some of this trend can be attributed to many Millennials preferring to live in downtown urban areas paying rent that they know is way too high, rather than buy a home.
Also, student debt is holding back many Millennials from buying a home, forcing them to pay higher rent prices. About 50% of Millennials who have student debt said they are uncomfortable taking on a mortgage. What’s more, this group was less likely to believe they could even qualify for a mortgage, according to data from the National Association of Realtors.
But a survey from Zillow shows that while mortgage payments are more affordable on average than monthly rent payments, renters are struggling to buy a home due to perceived down-payment barriers.
In 2017, rent increased 3.1% with higher increases seen in certain major metro areas, according to data from Trulia. Overall, rent has increased 19.6% since the end of 2012.