Actions

More Americans are becoming 'house poor' due to high housing costs

For renters, the Harvard study said monthly rents have been rising faster than wages for years.
New home construction
Posted at 6:38 PM, Jun 20, 2024

For Cody Hanson, a co-owner of Skull and Dagger Tattoos in Littleton, Colorado, higher housing costs is something he's far too familiar with.

"The dollar doesn't go as far as it once was," Hanson said. "You now have to pay like a mortgage just for a simple apartment."

Experts said that people should spend no more than 30% of their income on housing, and that includes your rent or mortgage payment as well as your utilities.

But a new report released Thursday from Joint Centers for Housing Studies of Harvard University says nearly 1 in 4 homeowner households fall into that category.

Related story: Potential homebuyers could face steep mortgages due to interest rates staying put

"I feel like it's about 30%, if not maybe more," said Hanson. "One of my last apartments got up to $3,000 a month. I simply just couldn't afford that, even coming down to a simple one-bedroom apartment it's still $2,300. I think that's insane."

It's even worse for renters. According to the study almost half are what's often referred to as "house poor." At 22.4 million households, that's the highest number on record.

For homeowners, the report cites the costs of buying and borrowing for a new home in a tight market, rising insurance premiums and escalating property taxes.

For renters, the Harvard study said monthly rents have been rising faster than wages for years, while the stock of units most affordable, under $1,000 a month, has shrunk by 6 million since 2012.

The report said a combination of high interest rates and high home prices has resulted in a median payment on a home mortgage of about $2,200 a month.

There was some positive news in the report, if you already own a home you want to stay in: Equity increased on the average home more than $100,000 over the past four years.