The largest generation of Americans is flooding into large cities to find work, but instead, have discovered the exorbitant housing costs.
How high is rent? Apparently, it’s high enough that some millennials live in vans and tents, which is much more affordable in terms of housing (defined as 30 percent of their income). A New York University study found that an average renter can afford less than 40 percent of available apartments in the top 11 U.S. metro areas.
Rent prices have climbed for 23 straight quarters and are projected to continue to increase.
Rentcafe’s 2016 Apartment Market report catalogued 20 cities with the largest rent increase.
The Commercial Property Executive reported that renter population has outpaced rental unit construction from 2004-2016.
If these two generations live together and become “boom-mates,” both could benefit.
“For retired or soon-to-retire boomers, extra rooms are an opportunity to supplement income and offset cost-of-living increases – as much as an additional $14,000 a year. For many older Americans, renting a room provides an economic boost that may help them stay in a home longer,” wrote data analyst Cameron Smith.
“For young adults, renting a room as opposed to a one-bedroom apartment could save them up to $24,000 annually.”
Trulia analyzed the top 25 largest rental markets and found the five most lucrative cities for renting rooms: Boston, Cambridge, Oakland, San Francisco, California, and New York City.
The site found baby boomers renting out a room in San Francisco could make $21,000 annually, while renters could save up to $14,000 per year.
Home-sharing and “multigenerational” homes are common in Europe, particularly on some college campuses for cash-strapped students wanting to minimize debt and for those who want to spend less when they travel.
Brian Chesky and Joe Gebbia founded Airbnb, a home-sharing service, on this idea. They couldn’t pay rent, so they converted one of their rooms into a spare bedroom for those who needed temporary housing, but could not pay for hotels.
Trulia’s idea has one problem. Many of these cities ban home-sharing or heavily restrict it to short-term.
Until cities reform home-sharing laws or increase housing construction, many millennials may be out of luck (and homeless). Intergenerational home-sharing could be a win-win for both parties and allow millennials to save money to become home-owners.