FILE – Pictured is a residential building in Los Angeles, California, on April 24, 2024. (Myung J. Chun / Los Angeles Times via Getty Images)
Because real estate prices and mortgage rates remain high in the United States, many Americans continue to live as renters and often spend a large portion of their income on housing.
Younger adults ages 22 to 35 spend an average of $25,620 per year as renters, according to a new study.
The resultspublished by credit-building platform Self Financial, are based on an analysis of the average costs of rent, utilities, insurance, furniture and moving expenses during an adult life as a renter in all 50 U.S. states. It also took into account the cost of student housing during four years of college.
Real estate prices are finally starting to fall
In a good sign for homebuyers, the share of available listings that have been price reduced rose to 18.9% in July — a 3.4% increase from the same period last year and the highest level in two years, according to a new report from Realtor.com. Price reductions are atypical in July, which is usually the peak time for home sales. But this year is different because sellers are trying to lure back lukewarm buyers who are facing both high costs and high interest rates.
Lifetime rental costs for the average American
The average American must expect a payment 333,065 USD for long-term rental, according to the study. This includes bills and additional rental-related expenses.
The results are based on the assumption that the average U.S. citizen enters the rental housing market for the first time after graduating from college at age 22 and exits it again at around age 35. This is considered the average age for purchasing one’s first home, according to the National Association of Realtors.
The results also took into account rental costs for each of those years, including an annual increase of 3.84 percent, according to Self Financial, with the average annual rent increase between 2000 and 2024 attributable to figures from the U.S. Department of Housing and Urban Development.
Based on a total average of $333,065 over 13 years as a renter, this includes expenses of $241,303 for 13 years of rent, an estimated $68,074 for utilities, and $12,145 for moving within the same state, according to Self Financial’s findings.
The most expensive US states for long-term rentals
When it comes to long-term rentals, some states have higher costs than others. According to Self Financial, Hawaii has the highest lifetime rental costs, estimated at $599,242 over 13 years, or $46,096 per year.
Colorado has the second highest rents, $540,772, for 13 years of rent (including utilities). Annually, about $41,598 is spent on the rental market.
Washington, DC, Maine and California rank among the five most expensive US states for long-term rentals.
“The Golden State also has six of the 10 most expensive urban rental markets in the U.S., according to Zillow, with rents in San Jose, San Diego and San Francisco averaging $3,000 or more per month as of June 2023,” Self Financial noted in its report.
Top 10 Most Expensive States for Renters (13-Year Rent Cost + Utilities)
- Hawaii – $599,242
- Colorado – $540,772
- District of Columbia – $479,998
- Maine – $451,217
- California – $448,852
- Connecticut – $423,348
- Rhode Island – $405,749
- Florida – $404,904
- Virginia-$403,480
- Utah – $378,722
Cheapest US states for long-term rentals
Kansas is the state with the lowest rents in the U.S., according to Self Financial’s report. A 13-year lease period, including utilities, costs renters an average of $238,225, or $18,325 per year.
Wisconsin was found to be the second cheapest state for long-term renters, with an average cost of $240,913 over a 13-year period and some of the lowest insurance premiums in the U.S. The study found that renters pay just $1,924 for renters insurance over their lifetime, which is 50% less than the national average.
Top 10 Cheapest States for Renters (13-Year Rent Cost + Utilities)
- Kansas – $238,225
- Wisconsin – $240,913
- Idaho – $244,551
- Nevada – $244,782
- Mississippi – $249,329
- Oklahoma – $255,846
- Arizona – $259,413
- Indiana-$262,276
- Iowa – $264,940
- South Dakota – $265,281
