Renters in many parts of the country are feeling the effects of inflation. Renting a home costs an average of 8.6% more in January 2023 than 12 months earlier, according to Bureau of Labor Statistics data. As a potential stopgap, renters might consider sharing their home with a roommate to help lower monthly housing expenses.
SmartAsset compared the average cost of a one-bedroom apartment with the average cost of splitting a two-bedroom apartment in 50 of the largest U.S. cities. By then accounting for relative cost of living, renters – and their roommates – can use this data to find the best city for their budget.
This is SmartAsset’s ninth annual study on how much a roommate saves you. You can read the 2022 edition here.
Key Findings
- Roommates save the most in New York despite high cost of living. Renters stand to save the most with a roommate in The Big Apple. Even after adjusting for the cost of living in New York, which is 83.6% higher than the national average, your monthly savings with a roommate is worth $886.80 when compared with a one-bedroom rental on your own.
- A roommate can save you big, even in the most affordable cities. Nine of the cities in our study have average one-bedroom rents that cost less than $1,000 per month. In Wichita, Kansas, for example, the average price of a one-bedroom is just $685 per month. While you stand to save less money with a roommate than you would in places like New York and Boston, the average savings in these nine cities is almost $4,534 per year.
- At a minimum, you’ll save $3,500 annually with a roommate. Sharing a two-bedroom with a roommate pays off significantly in all 50 cities from our study. Even in Tucson, Arizona, which ranks lowest for effective savings, you can save an average of $293 per month living with a roommate after adjusting for the cost of living.
1. New York, NY
The average one-bedroom rent in New York City was $3,667 per month between February 2022 and January 2023 – $525 more than the previous year. Renters in New York save a gross $1,628 by splitting a two-bedroom unit with a roommate rather than renting a one-bedroom by themselves. Adjusting for NYC’s cost of living, that’s equivalent to roughly $890.
2. Nashville, TN
The average rent for a one-bedroom in Nashville rose 8.87% between 2021 and 2022, reaching $1,730 per month. Sharing an average two-bedroom with a roommate in Music City saves you $825 per month when compared with a one-bedroom rental on your own. That’s $861.17 after adjusting for Nashville’s slightly below-average cost of living.
3. Boston, MA
Renting a one-bedroom in Beantown will cost you $2,777 per month, up 3.10% from the previous 12-month period. However, splitting a two-bedroom with a roommate in Boston lowers your monthly rent by $1,174. After adjusting for the city’s cost of living, which is nearly 50% higher than the national average, the monthly savings with a roommate is worth $783.30.
4. Miami, FL
A one-bedroom in Miami will run you $2,528 per month but splitting a two-bedroom with a roommate will cost you $1,688. Those savings are worth $684.14 after adjusting for Miami’s cost of living, which is 22.8% higher than the national average. Renters here should also note that the average one-bedroom rent in Miami rose just 3.58% between 2021 and 2022.
5. Cleveland, OH
Unlike the previous four cities, the average rent for a one-bedroom in Cleveland was lower in 2022 than in 2021. For a one-bedroom unit, you’ll pay $1,191 per month, which is 6.90% less than what you would have paid one year earlier. Sharing a two-bedroom with a roommate here saves you $621 when compared with a one-bedroom rental on your own. And, after adjusting for the below-average cost of living, the roommate savings in Cleveland is worth $660.81 per month.
6. Charlotte, NC
Splitting a two-bedroom with a roommate in Charlotte costs just $846 per month, while living in a one-bedroom alone costs $1,471. The $625 difference is worth slightly more ($648.62 per month) after adjusting for Charlotte’s cost of living.
7. Chicago, IL
Like New York, Chicago saw a significant one-year increase in the average cost of a one-bedroom rental. The $1,814 average between February 2022 and January 2023 was roughly 12% higher than the previous year. Comparatively, sharing a two-bedroom with a roommate costs $1,066 per person. After adjusting for Chicago’s cost of living, which is 17.1% higher than the national average, the monthly savings with a roommate is worth $638.88 when compared with a one-bedroom rental on your own.
8. Atlanta, GA
If you want to rent a one-bedroom in Atlanta, it’ll cost you $1,716 per month. However, the average two-bedroom rents for $2,183, which can save you $624 per month when sharing it with a roommate. And, after adjusting for Atlanta’s cost of living, those monthly savings are worth slightly more: $632.26.
9. Austin, TX
In Austin, you’ll save $613 by sharing a two-bedroom with a roommate when compared with a one-bedroom rental on your own. That’s because the average one-bedroom in Austin rents for $1,623 per month, while the average two-bedroom costs $2,019 per month. When adjusting for Austin’s cost of living, your monthly savings are worth $606.97.
10. San Diego, CA
The average monthly rate for a one-bedroom in San Diego was $2,417 per month between February 2022 and January 2023, representing a 5.31% increase year over year. Renters here stand to save $875 each month by sharing a two-bedroom with a roommate when compared with a one-bedroom rental on your own. But since the cost of living in San Diego is 47.4% above the national average, those savings are actually worth $593.31.
Data and Methodology
To find the cities where a roommate saves you the most, SmartAsset examined data from 50 of the largest U.S. cities. We compared them across these two metrics:
- Average rent for a one-bedroom apartment. Data comes from Zumper and covers monthly rent prices from February 2022 through January 2023.
- Average rent for a two-bedroom apartment. Data comes from Zumper and covers monthly rent prices from February 2022 through January 2023.
Using this data, we measured how much a person could save in each city by choosing a shared two-bedroom apartment over a one bedroom apartment by themselves. To do this, we compared the cost of a one-bedroom to half the cost of a two-bedroom for each city, assuming each roommate pays equal rent.
We then adjusted the monthly savings according to the local cost of living, using data from the Council for Community and Economic Research. The cost of living takes into account the price of housing, groceries, utilities, transportation, and miscellaneous goods and services.
For example, the monthly roommate savings in Los Angeles is $793.33, but the cost of living there is 52.5% higher than the national average. To calculate the city’s adjusted monthly roommate savings, we divided its monthly roommate savings by 1.525. As a result, in terms of purchasing power, the real monthly roommate savings in the City of Angels is $520.22.
Finally, we ranked the cities according to where the savings were the largest.
Limitations
The accuracy of our rankings is dependent on available data, which often represents an average value.
Renting vs. Buying Tips
- Work with a financial professional. While a real estate agent will help guide you through the home-buying process, a financial advisor can assist you in determining when is the right time to buy or rent a home. SmartAsset’s free tool matches you with up to three vetted financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Consider your price-to-rent ratio. Part of deciding whether to buy or rent is calculating your price-to-rent ratio. To do this, divide the value of a property you may potentially purchase by the total rent you’d pay in a year. Typically, a lower price-to-rent ratio means conditions are more favorable for buying a home and a higher price-to-rent ratio means renting is favorable.
- Do the math. SmartAsset’s rent vs. buy calculator can help you determine whether buying makes more sense than renting and vice versa. The tool takes into account where you live, your housing budget and how long you plan to stay in your home.
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The post What a Roommate Saves You in 50 U.S. Cities – 2023 Edition appeared first on SmartAsset Blog.
Wow, those are some interesting and helpful facts/statistics.