The largest group of renters, the Millennials, are being excluded from affordable housing due to low inventory and a widening gap between wages and the affordability of housing, including rentals.
Even with the housing and rental market cooling, it’s still not enough to make housing affordable for them. The top 90th percentile of Americans saw their wages increase while everyone else remained the same. Since 2000, those on top have seen their wages grow more than 15 percent, or making five times what a lower income American would make. Those on the bottom barely saw a three percent increase in their wages in 22 years.
Renters need to earn an average of $21.25 an hour to afford a modest one-bedroom apartment, which isn’t good news if you’re making anything less than that. While wages for Americans are larger than they were 50 years ago, data shows the buying power has largely remained the same. So despite Americans making more money, the rising cost of everything for several decades has widened the gap in affordability, and now a dollar doesn’t stretch as far as it once did.
While hourly wages have failed to keep up with rent, Zillow shows the median price for rentals has more than quadrupled since 2014. Data shows millennials are most affected by this.
Data shows that even before a recent skyrocket in rent prices, “the gap between what a typical rental costs and what the typical worker can afford based on their income has been growing.”
Despite millennials being “the nation’s largest generation,” they have the lowest homeownership rate and the “pressure trickles down into the rental market.” The price of rent has gone up nearly 18 percent since the start of the pandemic, and the “rapid growth in rent prices is a key contributor to overall inflation.”
In 79 of the largest 100 cities in the U.S, rent costs are up month-over-month. With homeownership out of reach for most millennials and Generation Z adults, studies show that homeownership is now less important to both generations than their predecessors.
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