It’s common for millennials to be thinking about buying a home or starting a family, but increasing rent prices are holding back many from making the leap into homeownership. An RentCafe analysis of data dating back to 1974 revealed that millennials pay an average of $92,600 in total rent by the time they turn 30.
While paying more than their baby boomer counterparts paid at the same age, millennials may have the highest median income among generations, with earnings of $206,600 over eight years. However, the analysis showed that they spend 45 percent of that on rent between the ages of 22 and 30.
RentCafe also found that young millennials, now aged between 22 and 29 years old, pay a median rent of $97,400 before age 30 on rent compared to older millennials, aged 30 to 40, who paid about $90,500 on rent in that same time. The difference, nearly $7,000, results in a 47 percent rent burden for younger millennials and 44 percent for older Millennials.
While younger millennials earn about $3,400 more than older millennials, the increased rent of $7,000 far outshadows the income — a trend that will likely continue.
Previous generations may have made less money, but they were able to a healthy rent-to-income ratio. Gen Xers spent a total of $82,200 on rent and earned about $202,100 when they were in their twenties, while baby boomers earned $195,700, with $71,000 of that going to rent. That’s a rent burden of 41 percent for Gen Xers and 36 percent for baby boomers.
As for the future, Generation Z is expected to pay about $102,100 on rent by the time they hit 30. As a result, they may have little financial room to buy homes due to overwhelming student loan debt and burdensome monthly rent. Gen Zers should expect to pay more in order to get more as they finally catch up with the other generations to achieve the American Dream.