Story at a glance
- Millennial renters’ earnings are sufficient to cover rental prices in at least 13 states, specifically in the country’s interior.
- But there is a decided gap between what is needed to afford a one bedroom in coveted coastal metros and what millennials earn.
- Filterbuy determined the millennial renter wage gap in a particular metro area by calculating the percentage difference between the median earnings for millennial renters and the median wage needed to rent a one-bedroom home without spending more than 30 percent of their income.
Soaring housing costs and stagnant wage growth put some of the nation’s most desirable metros out of reach for many millennial renters.
After adjusting for inflation, wages have grown by 6 percent while rents have spiked 25 percent since 2014, according to a recent analysis from Filterbuy.
The analysis concluded that millennial renters’ earnings are sufficient to cover rental prices in at least 13 states, specifically in the country’s interior. But they found a decided gap between what is needed to afford a one bedroom in coveted coastal metros and what millennials earn.
Millennials — those between the ages of 26 and 41 — make up the largest proportion of renters in the U.S. at around 27 percent.
Filterbuy determined the millennial renter wage gap in a particular metro area by calculating the percentage difference between the median earnings for millennial renters and the median wage needed to rent a one-bedroom home without spending more than 30 percent of their income.
The millennial renter wage gap is highest in the California metro area encompassing Los Angeles, Long Beach and Anaheim. Here the rental wage gap is 49.5 percent. Millennials’ median wages are roughly $36,649 while the annual median wage needed to afford a one bedroom is $72,560.
Millennial renters in the Miami-Fort Lauderdale-West Palm Beach, Florida metro area fare slightly better than their peers in the L.A. metro with a renter wage gap of 40 percent. The median one-bedroom apartment in the Florida metro cost renters $1,308 monthly. Yet millennial renters’ median annual wages of $31,414 fall short of what is necessary without spending more than 30 percent of their wages on rent.
San Diego-Carlsbad, Calif; Orlando-Kissimmee-Sanford, Fla.; San Francisco-Oakland-Hayward, Calif., round out the nation’s five metro areas where the millennial renter wage gap is the highest, according to Filterbuy’s analysis.
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A separate report released by QuoteWizard in August found that close to one-fifth of Americans are worried they will face eviction in the next two months as they battle rising rents and inflation.
Earlier data from Freddie Mac shows that fewer than 40 percent of Americans saw wage increases in the past year, while most experienced increases in their monthly rent.
Despite rising rents and increasing costs for potential homebuyers, younger generations still view homeownership as a benchmark of success. But with increasing mortgage rates, dwindling housing availability and slow wage growth, affordability remains the central issue.
The median home price in July was more than $412,000 — up 7.7 percent from the same time last year. Thirty-year fixed mortgage rates also rose by 2.5 percent from a year earlier.
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