REVEALED: The amount the average American drops on rent before becoming a homeowner
The average American pays a shocking six-figure sum in rent before finally buying a home of their own.
The average renter in the US spends a whopping $333,000 on rent, according to a recent study.
The cumulative total includes average rent, utilities and other costs, such as renters insurance.
The figure is based on estimates from the National Association of Realtors (NAR), which states that the average American rents their first apartment at age 22 and buys their first home at age 35.
Total costs include an average of $241,000 in rent payments, $68,000 in utilities, and $12,000 in moving costs.
The average renter in the US spends a whopping $333,000 on rent and related expenses
A study by Self Financial, a company that develops technology for personal finance, found that the average cost of rent in the US is $25,000 per year and just over $2,000 per month.
‘In recent years, more households have also been struggling with rental costs,’ says Nikki Beauchamp, real estate agent at Sotheby’s Fortune told.
There is a rent burden if one spends more than 30 percent of one’s income on housing.
As more young adults face rental problems, they have to wait longer to save for a down payment or have children.
“Such delays in family formation mean that people remain in rental housing longer,” Beauchamp explains.
However, the cost of renting for life can vary greatly by state and city.
According to Self Financial, renters who lease a home in Hawaii, the most expensive place to rent, for just over a decade can expect to pay $600,000.
In cheaper states like Minnesota, on the other hand, it costs about $273,000 to rent for the same period.
Rents in the US have risen steadily in the years since the pandemic.
According to Realtor.com’s June 2024 Rent Report, median rents are now 21 percent higher than they were in 2019.
The rise in house prices and mortgage rates over the same period has also increased the cost of buying a home.
Rents have increased by 21 percent since 2019
People are putting off saving for a down payment because of high rental costs
Buyers now need to earn an average of $106,000 to purchase a home, up 80 percent from January 2020.
However, it’s not all bad news: mortgage rates are falling, which could mean some housing markets will become a lot more affordable.
The average 30-year fixed-rate mortgage has fallen to 6.46 percent, according to the most recent data from Freddie Mac as of Aug. 22.
But experts say it could fall further to 6.3 percent in the coming months.
The monthly savings on mortgage payments from lower mortgage rates could be enough to put a significant number of additional homes within reach of the average homebuyer in a number of major cities and former growth towns during the pandemic, according to a new analysis from Realtor.com.