The rise of the roommate: "I’m probably saving $300 per month"

Even as inflation has cooled, ripple effects continue to cast a long shadow. Housing prices are approximately 47% higher in 2024 compared to 2020. 

And those cost increases are not just for buyers. Renters have also seen a huge jump, about a 33% spike since the pandemic, with 49 out of 50 major metro areas seeing an uptick in rental costs.

So what do you do if you can no longer afford — or don’t want to pay —  high rent? You get creative. And for many, that means getting a roommate — even for homeowners or others used to living alone. 

Why roommates are becoming more popular 

Most of us have roommates while we’re in college and often keep them for the first few years after graduating. However, at some point, living on your own becomes a milestone, just like getting married or having kids. 

But that’s becoming harder and harder. Research from SpareRoom has found a 167% increase in homeowners looking for roommates between January 2021 and January 2024. Also, about 8.7% of single young adults (between ages 18 and 29) had roommates — compared to 7.4% in 1990.

When market account executive Hannah Freeman was notified that her rent would be increasing by $250 per month, she was shocked. At first, she tried to look for another apartment. However, everything in her price range was farther than she wanted and apartments she liked were out of her budget.

Thankfully, one of her good friends was looking to move out of her parent’s house — so they decided to move in together.

“I’m probably saving about $300 per month by moving in with a roommate,” she said.

Freeman isn’t the only one getting a roommate. Even in her circle of friends, “I honestly can’t think of anyone that has their own place right now,” she said.

When she graduated college, Freeman imagined that she could live alone. But now that reality — and the hot housing market — has set in that feels less feasible.

“I’ve gotten two raises and two promotions in the past two years,” she said. “I thought at this point I could easily do it.”

Physical therapist Tim Richardt went from paying $2,300 in a solo apartment to paying $800 a month living in his friend’s house. Part of the decision was due to him starting his own business as well as preparing for a future surgery which could take him out of work for a while. 

“The decision was really like, ‘How can I blunt personal expenses to afford myself more patience and not having to rush back into patient care,’” he said.

Even though living with someone else has meant making adjustments in his dating life, overall the experience has been a “net positive.”

“I forgot how much I enjoy having other people and even other animals besides my dog in the house,” he said.  

How to live with a roommate

Having a roommate isn’t always the easiest thing to manage — especially if you’ve been living on your own. Here’s what to know:

Set boundaries and firm expectations

When you’re living with someone, conflict is bound to arise. One way to mitigate that conflict is set expectations early on. 

You should discuss things like who will take care of what chores, if you’ll share any groceries or household products and how you’ll split other expenses like utilities, internet and streaming services. 

Any financial expectations should be written in the lease. This can protect you whether you’re a homeowner renting out a spare room or a renter subletting from someone else. 

If you’re a homeowner

If you're a homeowner looking for a roommate, you should treat the process just like you would if you were getting a regular tenant. Run a credit check and a thorough background check. You should also verify their income and confirm they can afford to pay rent, even if they get laid off and don’t work for a few months. 

You can also ask for a cosigner if the prospective renter has a new credit history or if they work in an unstable profession.

Get references from past landlords and speak to them over the phone or in person, if possible. Try to get a reference from someone you know if possible — sometimes individuals will have friends or family members pose as landlords to trick you.

Remember, you are choosing someone not only to spend your time with, but also to help take care of your home. 

Have a solid emergency fund, no matter if you’re renting together or are renting out a room in your home. If the person moves out, you’ll have to cover the mortgage by yourself. 

Also, homeowners will have to declare the rental income on their taxes. And while it may be tempting to skirt those rules, you’ll run into problems later on, especially if the renter declares their rent as expenses on their taxes.

If you’re a renter

Make sure you have renters insurance and understand how it works and what it includes. Like any other type of insurance policy, renters insurance has a variable deductible. The deductible is what you must satisfy before the insurance company will pay out on a claim. You should have at least the cost of the deductible in your savings account, just in case.

You should also make sure you understand your lease thoroughly before you sign — don’t just give it a cursory glance. This applies even if you know the person you’re moving in with.