CHICAGO – Striking out on one’s own is a rite of passage, but it would appear more adults are doing less solo living lately.
According to a recent analysis by Zillow, as rents rise, more adult renters are finding roommates to cut costs — be they strangers, friends or relatives. The numbers are higher than ever before, said the real estate company, with 30 percent of unmarried adults ages 23 to 65 living together — up from 21 percent in 2005.
In the Chicago metro area, those numbers are slightly higher, with 32.4 percent of adults living together, up from 27.4 percent in 2000. The median rent in Chicago is $1,651. According to Harvard’s Joint Center for Housing Studies, millions of U.S. renters are spending more than 30 percent of their monthly income on rent.
“When you look nationwide at the share of households that had roommates or lived with parents, it did start to increase in the years just before the housing bust,” said Aaron Terrazas, senior economist with Zillow. “But it really took off during the financial crisis” that began in 2007, often referred to as the Great Recession.
Since 2005, the doubling up has increased at the same rate among employed and unemployed adults, regardless of age, Zillow found. The share of 20-somethings living in doubled-up households climbed faster than any other age bracket, but people in their 50s came in second.
The median individual income of an employed adult in a doubled-up household is $30,000, compared with the $45,000 earned by those living alone.
“I think there are both demographic and economic forces driving this doubling up — living with parents or living with roommates,” Terrazas said. “In the near term, I don’t see those forces turning around.”
Jessica Lautz, managing director of survey research and communications for the National Association of Realtors, agrees.
“We’re not seeing building where it should be to actually be able to meet the demands of potential homebuyers. As demand is strong, but building is still suppressed, it’s going to push up the cost of housing and that’s going to push people into rental units, which will push up rental prices as well,” she said.
“Housing inventory is tight and the interest rates are expected to rise, so as they continue to rise, that could push out consumers who are right on the edge of being able to afford a home,” she added.
But Lautz noted a potential silver lining: If renters are doubling up to shave housing costs and save for a down payment, “that’s a great opportunity for them.”
And renters, if your landlord ups the price, don’t be so quick to move, Terrazas said. People who renew their leases tend to save a little bit more than those who relocate, he said. Rent increases for renewals tend to be less costly than if you were to go out in the rental market and find a new place, particularly in booming markets.
“Compare and do your research of what your renewal rate is versus what you’d find on the market,” he said. “You have to do that three weeks to a month in advance of when you expect your lease to be renewed.”
Another tip from Terrazas: Look to buy a home sooner rather than later.
“Even with the housing market as it is right now, financially it does make sense to buy as soon as you can,” he said. Along with other potential benefits, you’d be building “equity at a time when interest rates are very low.”
©2017 Chicago Tribune
Visit the Chicago Tribune at www.chicagotribune.com
Distributed by Tribune Content Agency, LLC.