Overwhelming student loan debt keeps them out of the housing market
Millennials pay more rent by the time they turn 30 compared to their Baby Boomer parents and Gen-Xers, according to an analysis by apartment search website RENTCafé.
Using Census Bureau data, RENTCafé looked at each generation’s total income and total rent paid for an eight-year period, from 22 through 29 years of age. All amounts were adjusted to 2017 prices.
The study found that millennials have a rent burden of 45%, paying $92,600 in total rent by the time they turn 30. Although they do pay more for rent, the study also revealed that they have the highest total median income among generations, with their eight-year income at about $206,600.
While Gen-Xers and Baby Boomers made less money, they also spent less on rent. While they earned $202,100 while they were in their 20s, Gen-Xers only a spent a total of $82,200 in rent over the same period. This translates to a rent burden of 41%. Baby Boomers had a rent burden of only 36%. They paid total rent of $71,000 during their 20s, during which time they earned $195,700.
RENTCafé said that younger millennials keep renting because homeownership is simply unattainable given their overwhelming student loan debt. As millennials grow older, however, they slowly shift toward homeownership. RENTCafé expects the generation to drive demand for homes for sale, with their lifestyle patterns showing a need for affordable homes with attractive amenities.
