It’s painful enough to see your bank account drain every month when you have to pay rent. But even more alarming is to take a look at thecumulative amount spent on rent over the years.
According to a recent study by financial technology firm Self Financial, the typical American renter can expect to pay more than $333,000 over his lifetimeincluding utility bills and other expenses. The analysis used Zillow data to calculate median monthly rent and utilities by state, RentCafe data for average utility costs, and Insure.com for renters insurance estimates, and assumes that people start renting at age 22 and buy their first home at age 35, based on estimates from the National Association of Realtors.
On average, you spend around $25,000 a yearor just over $2,000 a month. But as is typical with real estate, these numbers can vary greatly from state to state or even city to city. For example, Hawaii is the most expensive place for renters, who can expect to pay a whopping $600,000 for just over a decade of rent, according to the study. Meanwhile, relatively cheaper places to rent include Texas, which would cost about $303,000 to live in rent, or Minnesota, which costs about $273,000.
While these numbers are shocking at first glance, real estate agents, economists and other housing experts say they aren’t all that surprising.
“In recent years, more families have been forced to pay rent,” he told Fortune Nikki Beauchampassociate broker at Sotheby’s International Realty in New York City. Rent burden typically means spending more than 30% of income for housing.
The cost of rent in the United States
If it seems to you that renting is much more expensive today than it was a few years ago, that’s because it is. In fact, median rent prices today are 21% higher than in 2019which equates to about $305 more per month, on average, according to Realtor.com’s June 2024 Rent Report. The median asking rent in June was $1,743.
“Single-family rents have hovered around their pre-pandemic growth rate of about 3% this year, after growing in double digits for most of 2021 and 2022,” he told Fortune Molly BoeselCoreLogic’s chief economist. However, “by the end of 2023, they will slow to the mid-2%.” While single-family rents are rising at a steady pace, median rents continue to rise.”
This makes the rent a long-term financial burden for many Americans. On average, over a total of 13 years of rent, Americans will spend about $241,000 on rent, $68,000 on utilities, and $12,000 on moving expenses.
However, despite the cost, Renting may be the preferred, or only, option for many. Renting is still a bit cheaper than buying a home, according to real estate information company Today’s Homeowner. Their data shows that 30 years of rent would cost an average of about $1.26 million, a bit less than the $1.3 million homeowners spend over the same period.
Housing affordability has become so difficult, in fact, that prospective buyers need to earn about $50,000 more than they did pre-pandemic to “comfortably” afford a home, according to a Zillow report from late February. Buyers now need to earn an average of $106,000 to afford a home, which is 80% more than in January 2020.
However, younger generations are still finding ways to make the most of the housing market, despite the rising costs of both renting and owning a home.
“Many of these are not necessarily first-time home buyers, but may also be considering more advanced scenarios including downsizing, rightsizing, and homes purchased after the end of a relationship,” Beauchamp said.For many people, renting represents flexibility and freedom.”.
The original article is available on Fortune.com