Millennials pay a whopping $92,600 in rent by the time they turn 30, despite earning more than previous generations, a new study by industry tracker RENT Cafe revealed Monday.
The study tracks millennial spending from age 22 to 30 using U.S. census data on rents and incomes.
During that eight-year period, millennials earned a total median income of $206,600.
Divided evenly, that would equate to just $25,825 a year. But many likely started below that level with their first job and saw their pay ramp up over time.
Gen Xers and baby boomers spent less
Generation X renters and baby boomer renters made less money than their millennial counterparts, but they also spent less on rent.
Gen Xers earned a total median income of $202,100 during those eight years and paid out $82,800 in rent by age 30.
Baby boomers got off even lighter. They earned a total median income of $195,700 during that period and paid $71,000 in rent. These numbers show a striking gap, as millennials are paying $21,600 more on rent than baby boomers did during that same eight-year period.
“It’s worth noting that the rent difference between millennials and baby boomers is twice as big as the income difference,” the report said.
The numbers also show that millennials are devoting 45 percent of their monthly income to rent. That’s more than the recommended 30 percent, and it’s outpacing Gen Xers (41 percent) and baby boomers (36 percent).
Young millennials have it worse
Things are even worse for young millennials. They earn a total median income of $207,200 between ages 22 to 30 but pay out $97,400 in rent. And they are devoting 47 percent of their income to rent. Beyond that, Generation Z renters are expected to pay over $102,000 in rent by the time they hit age 30.
Millennials face a variety of other economic challenges beyond paying the rent. One of the biggest is ever-increasing student loan debt, which many economists blame as the reason millennials aren’t able to buy homes.
They also tend to spend more on non-essentials, including Uber rides, pricey coffee and eating out, the report said. And many millennials prefer to live in urban areas and big cities, which drives their costs up even more.
Rents are high
One thing is certain: Rental rates in the Bay Area are pricey.
Figures from industry tracker Zumper show that the median asking-rent for a one-bedroom apartment in San Francisco was $3,397 in February. The asking-rent for a two-bedroom unit was $4,513.
And buying a home? That probably won’t be an option for many millennials anytime soon.
A long wait to buy a home
A survey released last year from ApartmentList.com predicts that millennials in many of the nation’s metro areas will need at least a decade to save enough money for a 20 percent down payment on a condo. The situation is even worse in Los Angeles, San Francisco, San Diego, San Jose and Austin. Based on their current rate of monthly savings, millennials in those cities each face a wait of at least 19 years, according to the survey. In Los Angeles it’s nearly 21 years.
“One of the things that is keeping millennials renting is the lack of desire to become homeowners,” said Jordan Levine, senior economist for the California Association of Realtors. “They still believe in the American Dream – and a big part of that is owning your own home – but they have a lot of barriers, including student debt.”
Levine said millennials are striving for the same goals as Gen Xers and baby boomers, they’re just taking longer to get around to them.
“All of those milestones, like getting married, having kids and owning a home haven’t gone away — they’re just doing them later in life,” he said. “And high costs aren’t limited to California’s housing market. There isn’t enough housing and that’s pushed rental vacancies down to single digits across the state. That’s led to a rapid growth in rental prices. It’s a fundamental supply and demand imbalance.”
Millennials are spending ,600 on rent by age 30, survey says