As millennials continue to bore into the real estate market, renting has become the mainstay of the younger generation. Inability to save and lack of a strong credit history are key contributors to homeownership rates dropping. If this trend continues the next Generation, Z, will be absolutely forced into renting.
RentCafe recently released an incredibly detailed study indicating that Generation Z will pay over $102,000 in rent by the time they hit age 30. This is based on millennials spending approximately 45% of their income on rent, which averages out to $92,600 by the time they hit 30. Compare this to Baby Boomers who paid approximately $66,900 in rent before turning 30.
Florentina Sarac states “Given their overwhelming student loan debt, younger Millennials may carry on renting, simply because the prospect of buying is not yet attainable. On the other hand, older Millennials are starting to slowly shift towards home ownership.”
Rent burdens have been the hardest on younger Millennials, aged 22-29, with 47%. Older Millennials clock in at 44%. With a substantial amount of income dedicated to renting, Millennials will not be afforded the luxury of owning a home easily.
Furthermore, Millennials earn and pay more in rent than both Generation X, and Baby Boomers. The income difference ranges from $4,500 to $10,900 while the rent difference ranges from $10,400 to $21,600.
“It’s worth noting that the rent difference between Millennials and Baby Boomers is twice as big as the income difference.”
Without a drastic shift in the real estate market, it will become more and more difficult for Millennials and subsequent generations to make the leap from renting to home ownership.