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Nearly 20% of Americans Struggle to Pay the Rent. Here’s Why

July 1, 2016
by Susan Shain
Contributor

I recently had a conversation with my parents about why my generation financially struggles.

Like many baby boomers, they assumed it was the result of poor decisions or laziness.

But I told them the truth: Rent is astronomical, we don’t get paid as much as they did — and we have zillions of dollars in student loans.

Like good parents, they believed me. But now I also have proof.

Apartment List recently analyzed census data from 1960 to 2014 to “understand how rent and affordability have changed over time.”

The findings?

“Inflation-adjusted rents have risen by 64%, but real household incomes only increased by 18%,” writes Apartment List director of data science Andrew Woo.

WHAT? Give me a sec while I pick my jaw up off the floor…

Why It’s So Hard to Pay Your Rent

So, yes, incomes have risen — 15-25% since 1980, Woo says — but rents have risen “twice as fast.”

That’s a huge burden on the 37% of Americans who rent — which, by the way, is a higher percentage than ever before.

Of these people in rental housing, 74% are under the age of 44, and 51% are under 30.

Nearly half of renters (49%) are considered “cost-burdened,” Woo explains, meaning they spend more than 30% of their income on rent.

That number has almost doubled since 1960, when 24% of renters were cost-burdened.

Throw in the average student loan, which is 56% higher than just 10 years ago

Then child care costs, which have risen more than 70% since 1985

The cost of living is overwhelming.

And it’s an understatement when Woo notes: “Nearly half of [renters] are struggling to pay the rent.”

Here are the grim findings in picture form.

160424_Renter_Census_Data_Simple_Table_v3_Income_vs_rent_1960-2014_mh99uz

So, what if things had gone differently? If rents had risen, you know, at the rate of inflation?

“The average renter would be paying $366 less in rent each month,” Woo writes.

$366 per month. $4,392 per year.

That’s more than enough to make a typical student loan payment, almost enough to fully fund a Roth IRA and — in a few years — enough to make a down payment on a house.

So, what can you do (besides bang your head against the table)? Here are a few posts that might help:

Your Turn: How do you afford your rent?

Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at susanshain.com, or say hi on Twitter @susan_shain.

by Susan Shain
Contributor for The Penny Hoarder

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