The vast majority of people in their 20s rent instead of own, which creates the question of how much they lose long term, not owning.
- 66% of of people under 35 are renters.
- 33 is the average age of buying a first house.
- $1,326 is the average rent paid currently in the US.
Today, the average age for moving out a parent’s home, renting and being completely independent is 24 years old in the US.
The average age of buying a first home is 34.
Rent is $1,326 a month, even though it should be mentioned that’s what people currently pay, versus asking prices today being $1,900.
Running with $1,326 a month, that’s $15,912 a year.
$143,208 over a period of nine years.
That’s a lot, but gets even bigger factoring in that residential real estate has an average return rate of 4.7 during the last 50 years.
$180,530 would be the amount of money, if the rent was equity in the property on average if sold.
To add some perspective on how much money $180,000 is, $428,000 is the median price of homes currently, meaning right there is 42% of a home sale.
Also, if a person just put the $180,000 into the S&P, with an average return of 9.8% the last 25 years, from ages 33 to 65, that’d come to 3.5 million dollars with no annual additions.
Final point
Point of writing this is to show by having the majority of people in their 20s and many in their 30s skip on ownership in properties and instead rent, it’s having people sit on hundreds of thousands of dollars.
This is why some policies should be looked at, be it tax credits for landlords to offer partial equity buy in’s or a re-examination of laws on ownership in place to stop this.
It’s really just leaving money on the table for tens of millions.