Young Americans now can hardly afford to rent a house

Average wages have increased, but rents in the US have increased faster, making it difficult for many young American graduates to find a satisfactory room.

After graduating from Michigan State University (USA), Waleed Huwio moved to New York to work. He shares two friends in an apartment, spending $1,250 a month to have his own bedroom.

Huwio said that thanks to accepting to live together, he did not have to pay too much money. However, the landlord required his group to prove enough money to buy the house outright. This is a very large amount, the group cannot guarantee their meager salary.

Huwio doesn't even have a guarantor - responsible for paying the rent in case he can't afford it.

Rents in the US are growing faster than wages. Pic: New York Times.

At the time, he was forced to find a service company for support. Accordingly, this company stood to guarantee and help him complete the contract. They charge the equivalent of one month's rent, in addition to some other currency for the duration of their use.

And for Huwio, this amount is not small.

“Fresh graduates like me have a hard time finding a convenient place to live. The rent was expensive, we had to pay extra for the service. I just want to save as much as I can,” Huwio told the WSJ.

Starting salary is not enough to rent a house

Young employees in the US are having high demands on salary and benefits. The National Association of Colleges and Employers says many businesses plan to raise wages for young workers, including fresh graduates.

In its latest figures, the association said graduates in 2020 earn an average starting salary of about $55,000 a year, up more than 14% from the average about a decade ago.

However, despite the increase in wages, young people are still living in an unprecedentedly difficult and expensive rental period.

Young people accept to live with strangers to reduce rental costs. Pic : The New York Times

According to rental platform Apartment List, the average apartment rent in the US has increased by more than 16% in the past year and 28% compared to January 2017.

Many American experts believe that each person should not spend more than 30% of their income on rent. But the rent in some areas with convenient transportation has exceeded this mark (compared to the average income of young workers).

Specifically, the median rent for a one-bedroom apartment in Nashville is currently $1,264 per month, about 28% of median pre-tax income.

“Rent prices have skyrocketed,” said Chris Salviati, economist at Apartment List. Fresh graduates or young people in the labor market are having a much harder time than the same group of people a few years ago.”

A 2019 analysis of apartment rental platform HotPads showed that over the past decade, rents have always been higher than young people's initial income.

A fresh graduate can't afford a budget apartment in 50 major cities across the country at all.

Increasing demand for shared accommodation

Amid high rent prices, many young people accept to share rent. This helps them get a place to live at a more economical cost, convenient for public transport.

John Shriber, co-founder of roommate platform Roomster, said demand for roommates in the US increased about 40% in the past year, especially in vibrant cities like Nashville, Austin and Atlantai.

As of the end of April 2022, Roomster has only 338 rooms in the city of Austin advertised for roommates. Meanwhile, the number of people with common rental needs is up to 1,756 people.

According to Mr. Shriber, the average cost to find a roommate on Roomster has increased 33% this year, reaching $948 per case. Normally, people pay $917 to find an apartment with a suitable housemate.

“Life has never been cheap, but things are much more expensive now than they used to be,” Mr. Shriber said.