One American generation is struggling to find affordable housing. A second is sitting at home with a lots of empty bedrooms. Real estate site Trulia argues it’s a match made in housing-market heaven.
Sky-high rents and house prices keep squeezing American’s finances. Home-ownership rates are well below (pdf) pre-recession levels, while the share of US income spent on rent has spiked from 21% to more than 25% in the last five years. As 90% of retirement-age older Americans say they want to stay in their homes, and millennial renters are desperate for cheaper rents, Trulia thinks “boom-mates” are an answer.
To get a handle on its potential, Trulia used US Census data to calculate the number of vacant bedrooms in households headed by people born no later than 1964 (the last year of the baby boomer generation). By identifying the total number of bedrooms, then subtracting the the number of inhabitants and one additional bedroom to account for alternate uses such as a home office, Trulia says there are 3.6 million bedrooms vacant in the 100 largest US metro areas. Top markets had an average of 4.2 bedrooms per household and 2.6 household members.
The most available bedrooms were in New York (177,734), Atlanta (141,462), Washington (133,685), and Los Angeles (114,731), where about 3% to 5% of homes have spare capacity. Landlords in those cities could earn an estimated $11,000 per year by renting out rooms. In San Francisco, despite having relatively few available bedrooms (22,003), the highest returns were on offer: $21,780. On the other side of the coin, renters in Boston, New York, and the Bay Area could save the most, about $11,000 per year, by renting rooms from boomers rather than getting their own one-bedroom apartments in those cities.
Taking in cash-strapped strangers might seem like a strange custom, but the practice has been booming in Europe, and was once a mainstay in America’s urban centers. The Boston Globe reports that a third to half of 19th-century urban residents took in boarders or were boarders themselves. Poet Walt Whitman, who lived in boardinghouses in his early teens, described them thusly in 1842: “Married men and single men, old men and pretty girls; milliners and masons; cobblers, colonels, and counter-jumpers; tailors and teachers; lieutenants, loafers, ladies, lackbrains, and lawyers; printers and parsons—‘black spirits and white, blue spirits and gay’—all ‘go out to board.’”
Rolf Pendall, co-director of the Urban Institute, says renting out spare rooms is laudable, but not a solution to the housing crunch for millennials. Many spare rooms in boomer homes are reserved for visiting friends and family, he speculated, and while Airbnb and other online platforms are making it easier than ever to rent out rooms, “I don’t think it’s enough to make a serious dent in demand for housing in hot markets,” he says.
Pendall says the problem for many millennials isn’t their wealth gap with boomers, but with one another. Well-to-do Americans can pass on their wealth to their millennial children who can easily buy high-quality (or even new) housing located in booming cities near desirable jobs. Others in the same generation still struggle to afford poor-quality rental housing. “More than generation gaps, I see gaps within generations,” says Pendall.