Feb 10, 2017

As renters face escalating housing costs, you should be concerned that it's getting harder for them to save for a home purchase. Is there anything you can tell them to do to help their chances of being financially prepared to transition to home ownership? Actually, there is — and it is pretty basic advice: Get a roommate.

A new study shows that renters could potentially save anywhere between $25,000 and $100,000 over the long haul by sharing space with a roomie. Savings like that can help them break into ownership much faster. A record-high 11 million renters are spending at least half of their incomes on housing — an amount financial experts say is too much — and an additional 21 million are paying 30 percent or more, according to the annual State of the Nation's Housing Report from Harvard University's Joint Center for Housing Studies. The high rents are making it difficult for renters to save enough for a down payment on a home, according to a 2015 study by the National Association of Realtors®.

But a renter who lives with a roommate in a two-bedroom apartment and splits the rent 50-50 could potentially save an average of $420.70 a month versus a renter who lives in a one-bedroom apartment alone, according to financial website SmartAsset.com. In just five years, that could amount to a savings of $25,242. In high-priced markets, the savings could be more than double.