If you’ve been patting yourself on the back for living minimally in a studio apartment in the hopes of squirreling away a couple of hundreds of dollars every month for a down payment sometime in the future, brace yourself: I hate to break it to you, but you might actually be losing money. At least according to a new analysis from HotPads, a Zillow company that focuses on apartment searches, the median price for a one-bedroom apartment in most cities is actually cheaper than a studio.
For the analysis, the economists at HotPads compared the median rent of studios and one-bedrooms in 49 major metropolitan areas, as well as the national figure. They found that nationally, the median rent for a studio apartment is $1,385 per month—$125 more than the median rent for a one-bedroom, which is only $1,260. This pattern was found across all of the metros surveyed except four: Atlanta, Detroit, San Jose, and New Orleans.
Don’t chalk it up to square footage: It’s not that studios are actually masquerading as grand lofts or anything. Typically a one-bed runs 730 square feet while a studio is only 500. The real answer? Same as just about anything in real estate: Location, location, location. In the analyzed metro areas, studios were typically a third of a mile closer to job hubs than one-bedroom rentals. Additionally, it’s an issue of supply and demand. Generally there are more one-bedroom units available and they’re spread out across the metro area, so prices can remain low. Think of it this way: If more people want to live close enough to work that they can walk, that’s more demand for limited space, so those units are going to be a bit smaller than they would be farther out, i.e. studios! Additionally, since there’s more competition for these limited amount of smaller units, they can demand a higher price.
So what about Atlanta, Detroit, San Jose, and New Orleans? According to Joshua Clark, economist at HotPads, it’s because studios and one-bedrooms in these cities are pretty much the same—besides, of course, size. “When studios and one-bedrooms are distributed in similar locations across a city and come with similar amenities, we can expect people who want that extra bit of space or privacy will pay more for that luxury,” he says.
Need to rethink how to save money on housing? Besides moving back in with parents, there’s, of course getting a roommate or two—or you can try this real estate agent-approved savings trick next time you move!