Which generation is most likely to face such a cost burden? The answer may not be what you’d think, according to a new study from ABODO Apartments.
Nearly two-thirds of Millennials rent rather than own, and since the oldest Millennials have yet to reach their 35th birthdays, it’s safe to say they’re at or near the beginning of their careers. Their lower earning power, in theory, translates into a higher hurdle for meeting the monthly rent check.
However, ABODO says, on the whole that isn’t the case. Slightly over 30% of Millennials overall face a housing cost burden, while 46.5% of Millennial renters do. Baby Boomers are far less likely to rent—with just 23.3% of them doing so, although that number is expected to grow significantly—but among renting Boomers, 49% are cost-burdened.
ABODO attributes this largely to the fixed incomes that come with retirement or semi-retirement. At an average of $890 per month—compared to $980 for Millennials and $1,050 for Gen Xers—Boomers pay the lowest median rents. That’s fortunate, ABODO says, “considering they earn the lowest median household income by nearly $7,000.” Renting Boomer households live on an income of $33,000, lower than the $39.900 median income earned by Millennials and $44,700 by Gen X.
We may see more Boomers running up against this cost hurdle. “According to the State of the Nation’s Housing 2017 report by Harvard’s Joint Center for Housing Studies, 44% of renter growth between 2005 and 2016 was due to households aged 55 and older,” states an ABODO report. “A Freddie Mac survey projects that number will grow, finding that 71% of those aged 55 and older expect to rent their next home, and 60% cite affordability as a main factor in their housing decisions.”
The youngest of the three generations, Millennials are alternately praised and scolded for their financial management. However, ABODO cites a recent study showing that “Millennials are concerned about their money, too: 67% say their financial stress plagues their thoughts and productivity at work. Considering that 80% of Millennials want to become homeowners—though only about a third have been able to hurdle the down payment—and are still falling below the cost burden mark in such high numbers, that stress seems inevitable.”