Rent in the USA costs a third of a million dollars
It’s painful enough to see your bank account drain every month when rent is due, but it’s even more distressing when you look at the total amount you’ve spent on rent over the years.
In fact, according to a recent study by financial technology company Self Financial, the typical American renter can expect to pay more than $333,000 during their time as a renter, including bills or utilities. The analysis used Zillow data to calculate average monthly rent and utilities by state, RentCafe data for average utilities, and Insure.com for renters insurance estimates. Based on estimates from the National Association of Realtors, people are expected to start renting at age 22 and buy their first home at age 35.
That equates to an average expenditure of about $25,000 per year, or just over $2,000 per month. But as is common in the housing market, these numbers can vary widely from state to state or even city to city. For example, Hawaii is considered the most expensive place for renters, where they have to spend a whopping $600,000 for just over a decade of rent, according to the study. Relatively cheaper places, on the other hand, are Texas, where you have to rent for life, at about $303,000, or Minnesota, where you pay about $273,000.
While these numbers may seem shocking at first glance, real estate agents, economists and other real estate experts say they are not so surprising.
“More households have also become rent burdened in recent years,” said Nikki Beauchamp, associate broker at Sotheby’s International Realty in New York City. Assets. Rent-burdened typically means spending more than 30% of income on housing. And since some people wait longer to have children or save for a down payment, “delays in starting a household will keep people renting for longer periods of time,” which would also increase the amount of rent spending over time.
The cost of rent in the USA
If it feels like rent is much more expensive today than it was a few years ago, that’s because it is. In fact, median rental prices today are a whopping 21% higher than they were in 2019, averaging about $305 more per month, according to Realtor.com’s June 2024 rent report. The median asking rent was $1,743 in June.
“Single-family home rents are hovering around their pre-pandemic growth rate of about 3% this year after growing at double-digit rates for most of 2021 and 2022,” said Molly Boesel, chief economist at CoreLogic Assets. However, “they slowed to the mid-2% range at the end of 2023. While rents for single-family homes are rising steadily, the median rent continues to rise.”
This makes renting a long-term financial burden for many Americans. Of the total amount the average American will spend over 13 years as a renter, they will likely spend about $241,000 on rent payments, an estimated $68,000 on utilities, and $12,000 on moving costs.
Despite the cost, renting is the preferred – or only – option for many. According to real estate information company Today’s Homeowner, renting is still slightly less expensive than buying a home. Their data shows that 30 years of renting would cost someone on average about $1.26 million – just under the $1.3 million homeowners spend during that time. Housing affordability is so tight, in fact, that prospective buyers now need to earn about $50,000 more than they did before the pandemic to “comfortably” afford a home, according to a Zillow report from late February. Now, buyers need to earn an average of $106,000 to afford a home, up 80% from January 2020.
Yet despite the rising costs of renting and owning, younger generations are still finding ways to make the most of the housing market.
“Many of these are not necessarily first-time buyers, but are also considering later-life scenarios (including) downsizing, adapting homes (and) purchasing homes after relationships end,” Beauchamp said. “For many people, renting means flexibility and freedom.”
