Surprise! Housing costs are outpacing income growth, which has a disproportionately adverse effect on the millennial population. Double surprise: generational wealth can help a lot when it comes to absorbing these increases without a commensurate uptick in salary.
A new report from Apartment List found that since 2000, home prices have increased 2.4 times faster than incomes in households headed by someone younger than 35. Rents have increased 61 percent since 2000 as well, more than doubling growth in incomes for millennials in the same time period. No amount of avocado toast is going to make up for those margins.
Enter the bank of mom and dad.
The same research found that 7.9 percent of non-student millennials reported getting financial support from their parents to help pay their rent. Some 17.1 percent anticipated help from their parents when it came time for a down payment. Of the millennials who received funds from their parents, one in three reported that their parents paid their rent in full and one in three expected family to cover at least 30 percent of their future down payments.
The report was quick to point out a few caveats about its own data. First, it doesn’t quite account for millennials who receive financial support from their parents in more general ways. The survey asked respondents specifically about assistance with rent and down payments. Researchers caution that the prevalence of assistance is likely higher than it seems.
Next, they also point out that 2 percent of renters older than 40 also are receiving assistance from their parents, which is reason enough to lay off the millennials.
The report also reminds us about the implications of parental financial support and widening economic divides in the United States. Many families cannot afford to help out their millennial offspring. “Financial support from family tends to reinforce existing class structure and contributes to income inequality,” the report concludes.