The cost of living has skyrocketed since the 19th and 20th centuries. In terms of housing, renting has become much more popular among my generation and younger ones. While some of us grew up in houses and still dream of owning our own someday, it’s increasingly out of reach for many.
According to RentCafe, as of November 2024, the average cost of rent in the U.S. is $1,748 per month for about 901 square feet. I lived in Connecticut for 28 years (renting for about four years) and Florida for one year. Connecticut’s average rent is 17% higher than the U.S. average, at $2,044, while Florida’s is 12% higher, at $1,955. So when people say Florida is cheaper to live in, they’re usually comparing it to states like Connecticut, California ($2,587), Hawaii ($2,668), Massachusetts ($2,837), Maine ($1,971), New Hampshire ($2,112), New Jersey ($2,337), New York ($2,739), Rhode Island ($2,129), Vermont ($2,152), Virginia ($1,972), Washington State ($2,020), and Washington, D.C. ($2,474). Essentially, it’s less expensive than much of the Northeast.
Whenever I mention my rent to my parents or others in their age group, they gasp in shock and say, “That’s a mortgage!” Actually, everyone who owns a house says that. So why aren’t people in my generation buying homes? Why are we “wasting” money on rent? The simple answer is that many of us can’t even afford the down payment on a house.
In the late ’80s, my parents were in their mid-to-late 20s. At that time, buyers typically made down payments of 20% or more on homes to secure a loan. For example, in 1981, the down payment on a $65,000 mortgage was $20,000, which was 31% of the purchase price. By the ’90s, the median home value increased to $100,000, with similar down payment requirements. In 2024, the average cost of a house is $545,000, with an average down payment percentage of 13.6%-18.6%. For simplicity, let’s use a house price of $300,000 and a 15% down payment. That totals $45,000.
For a college-educated 30-year-old, the average salary is about $50,000-$60,000, depending on the job and experience. Let’s assume this person earns $50,000 annually. After deducting approximately 24% for taxes, their take-home salary would be around $38,000, or roughly $1,450 per paycheck twice a month.
This individual may also have student loan debt. Gen X averaged around $44,000 in student loan debt, while Gen Z averaged $23,000. Assuming they owe $45,000 and pay it off over 20 years at an interest rate of 6.5%, their monthly payment would be about $335. With a monthly take-home pay of $2,900, subtract $335 for loans, leaving $2,565.
Rent is $1,748 per month. Subtracting that leaves $817. Depending on how much they drive, gas costs can range from $30 to $80 per week. Let’s estimate $120 per month for gas. That leaves $697. The average single person spends $200-$400 on groceries monthly; let’s use $300. That leaves $397.
In 2024, the average monthly car payment for a used car is $520, but to avoid negatives, we’ll assume they pay $300. This leaves $97 for discretionary spending.
But wait—this person wants to save for a home. Let’s say they save $50 per month. For a $300,000 house with a $45,000 down payment, saving $50 monthly would take 75 years. After paying off their student loans in 20 years, they could redirect the $335 loan payment toward savings. Over 20 years, saving $50 monthly would accumulate $12,000, leaving $33,000 needed. Dividing this by $385 ($335 + $50), it would take 85.7 months, or 7.14 years, to save the remaining amount. This means it would take about 27 years in total to save for the down payment—assuming home prices don’t continue to rise. (Yes, short-term investments, multiple jobs, or loan forgiveness could help, but this is a basic example.)
Next time someone hears your rent and says, “Wow, that could be a mortgage,” show them this breakdown. We aren’t buying homes because we can’t afford the down payment, so we make do with what we can pay right now.
Thank you for reading!
God bless you all!