Photo: Robert Clark
US housing costs have risen steadily and substantially since 2000, while wage growth has lagged behind these increases. As a result, paying off student loan debt and making rent can prove to be especially challenging for Millennials.
In fact, many Millennials are reportedly having to make withdrawals from the Bank of Mom and Dad for assistance paying housing expenses, according to the results of an online survey released yesterday by the listing site Apartment List.
National home prices and rents have risen by 73 percent and 61 percent, respectively, over the last 18 years. Yet wages have only grown by 31 percent over the same period.
And since 2000, home prices have increased 2.4 times more than incomes for Millennial-headed households. Similarly, rents have grown at double the pace of income for Millennial households over the same period.
Lagging wage growth and rising housing costs have 25 percent of Millennial renters spending over half their income on rent.
“While income growth has picked up since 2013, home prices are rising at a much faster rate. Many jobs don’t pay enough to allow renters to afford rent, let alone save for a downpayment,” says Apartment List.
Some 7.9 percent of all non-student Millennials surveyed reported that they received some monetary assistance from family members to pay their rent.
While some said they received a relatively small amount of money from family, under $100 per month, others receive much higher amounts.
Of those that reported receiving money from family, around 20 percent said they receive assistance totalling well over $8,000 annually for housing costs. The parents of one in three non-student Millennials who do receive parental assistance reportedly pay their kid’s monthly housing costs in full.
But the benefits of family financial assistance extends beyond just the convenience of month-to-month help making ends meet.
“The thousands of dollars per year parents contribute to their children’s rent allows millennials to live in apartments they wouldn’t be able to afford, pay off student loans quicker or save for a downpayment,” says Apartment List in the digital release.
When it comes to buying their first home, over 17 percent of Millennials expect to receive some help towards a downpayment — a process that could otherwise take as long as 20 years for some Millennials to save enough in many hot housing markets.
And, nearly one in five renters expect some help from the Bank of Mom and Dad when they make the move to buying.
One in three Millennials reportedly anticipate that their family will cover 30 percent or more of their downpayment. But 4 percent of respondents anticipating assistance are expecting upwards of $40,000 from family towards buying a home.
However, many Millennials are expecting far smaller sums.
Of those expecting assistance, 33 percent expect less than $1,000 in assistance and 15 percent expect to receive $10,000 or more from family for a downpayment.
“In a real estate market where homes prices have increased 2.4 times faster than young household incomes, family assistance allows a subset of millennials to achieve homeownership years before they’d be able to without support,” says Apartment List.
Apartment List conducted the online survey between August 23, 2017 and February 12, 2018. It adds that Apartment List users may not “perfectly represent the general population as the platform is online and app-based and tends to feature large, multifamily properties.”
Click here to read the entire release.