(NewsNation) — Because of rising house costs and stagnant wage growth, millennial renters might be out of luck if they’re hoping to live in certain metro areas.
A new analysis by Filterbuy shows that while rent stayed flat because of eviction moratoriums and government assistance programs in 2020, they grew by 17.6% in 2021, and by another 6.7% over the first half of 2022.
Adjusting for inflation, Filterbuy found that the median U.S. rent has grown by 25% since 2014. Meanwhile, the median hourly employee earnings in the U.S. have only increased 6% since then.
Many millennials, in the age range of 26 to 41, are at an age when most people buy their first or second home, Filterbuy points out — but millennials make up 27.7% of renters in the U.S., which is a larger proportion than any other generation. Filterbuy attributes this to rising costs of real estate, as well as other financial difficulties millennials have faced such as the Great Recession and debt.
Redfin reports that home prices nationwide were up 7.7% in July 2022 compared to this time last year. Homes sold during that time for a median price of $412,198.
Coastal states, like California, tend to remain out of reach for millennials, because they tend to have higher housing costs because of limited supply, Filterbuy said. Metro areas, which include some of the most “desirable” and “fastest-growing” cities in the U.S,. have major renter wage gaps for this age group, according to the site.
Los-Angeles-Long Beach-Anaheim, California had the largest gap: Millennial median wages there are around $36,649, while the annual median wage needed to afford a one-bedroom rental is $72,560.
Large Metro areas with the Largest Millennial Renter Wage Gap (per Filterbuy):
- Los-Angeles-Long Beach-Anaheim, California (-49.5%)
- Miami-Fort Lauderdale-West Palm Beach, Florida (-40%)
- San Diego-Carlsbad, California (-39.9%)
- Orlando-Kissimmee-Sanford, Florida (38.1%)
- San Francisco-Oakland-Hayward, California (-37.4%)
- New York-Newark-Jersey City, New York, New Jersey and Pennsylvania (-36.9%)
- San Jose-Sunnyvale-Santa Clara, California (-36.1%)
- Riverside-San Bernardino-Ontario, California (-34.5%)
- Portland-Vancouver-Hillsboro, Oregan and Washington (-33.8%)
- Boston-Cambridge-Newton, Massachusetts and New Hampshire (-31.6%)
Filterbuy researchers calculated the difference between the median wage for millennial renters, and the median wage necessary to afford a one-bedroom without spending more than 30% of their income to see which locations had the largest gaps.
A survey by Freddie Mac found that 60% of American renters saw rent increases over the past year. However, less than 40% saw their wages increase, research from Freddie Mac, cited by The Hill, showed. Of those surveyed, only a third who earned pay raises in the last year said their new incomes will cover their rent.
And as the years go on, an increasing share of millennial renters say they don’t think they will ever own a home, according to Apartment List. Their data showed 22% of renters viewed themselves as “always renters” in 2021.