RENTCafé has examined the total income and total rent paid by baby boomers, Generation X, and millennials between ages 22 and 29, as recorded in the U.S. Census, in order to discover whether millennial renters are more cost-burdened than renters in previous generations. The study examines single renters paying the national median rent while earning the national median income over a given eight-year period, and all amounts are adjusted for inflation.
Under these parameters, a single millennial will earn $206,600 between ages 22 and 29 and spend $92,600 on rent by the time he or she turns 30. This means millennials are spending a median 45% of their income on rent—far higher than the 30% cost-burden threshold.
Millennials are earning a higher median income than any generation that came before them, but they're also spending more on rent relative to inflation than either boomers or Gen Xers did at their age—and spending a higher percentage of their income on rent. Gen Xers earned about $202,100 between the ages of 22 and 29 and spent $82,200, or 41% of their income, on rent. Boomers, meanwhile, earned a median of $195,700 in their 20s and spent $71,000, or 36%, on rent.
Beyond their heavy rent burden, millennials, also known as Gen Yers, face the financial pressure of rising student loan debt, RENTCafé notes, as well as the high costs associated with urban living. Many economists point to student loan debt as the reason millennials have been unable to buy homes at the same rates as previous generations.
Gen Xers have also faced their own housing difficulties, as the housing market crash occurred when they were in their 30s and 40s. This, according to RENTCafé, shut a number of Gen Xers out of homeownership and forced them into renting for longer than boomers before them.
While Gen Yers are earning $10,900 more in their 20s than did their boomer parents, they're also spending $21,600 more for rent than boomers did at the same age. Millennials are also earning $4,500 more than Gen Xers did at the same age but are paying $10,400 more in rent. RENTCafé attributes this smaller gap between income earned and rent paid to rising rents in the aftermath of the housing crisis.
RENTCafé also examined the millennial cohort as two separate groups: older millennials (currently ages 30 to 40) and younger millennials (now ages 22 to 29). The younger group is projected to pay a median rent of $97,400 before its members turn 30 and to spend 47% of their median income on rent. Older millennials earned $3,400 less in their 20s than younger Gen Yers will, but they also spent $6,900 less on rent and experienced only a 45% cost burden.
Based on the observation that total rent paid between the ages of 22 and 30 rises by about $5,000 to $8,000 each decade, Generation Z, those consumers currently ages 22 and under, could be paying $102,100 on rent between the ages of 22 and 30.
