Homeowners are feeling Less Financial Strain than Renters
The US Census defines cost-burdened households as a household that spends at least 35 percent of their monthly income on household costs (including their mortgage, utility bills, property taxes, and other costs associated with homeownership). In other words, cost-burdened households are households that may feel a significant financial strain (or burden) as a result of owning their home.
But the good news? Cost-burdened households in the US are on the decline.
According to recent census data (outlined in an article for REALTOR Magazine), only 20.9 percent of homeowners with a mortgage were cost-burdened in 2018. That’s down from 28.8 percent a decade ago—a drop of nearly 8 percent. The percentage of cost-burdened homeowners is also significantly less than cost-burdened renters, at 40.6 percent.
Many people continue to rent because they think that it’s the more affordable option—and that owning a home is out of their reach. But, as it turns out, rents have seen sharp increases across the country—while the average mortgage payment has actually fallen.
According to a report from CoreLogic, the “typical mortgage payment” (a monthly mortgage payment based on the US median home sale price that incorporates both principal and interest) has decreased four percent since 2005—while the monthly cost to rent a single-family home has increased by 36 percent. Renters are also more cost-burdened than homeowners, with nearly half (46 percent) spending more than 30 percent of their total income on rent (compared to just 27 percent of homeowners).
If you’ve been renting as a way to save money, it might be time to rethink your strategy. Rent has been steadily increasing across the US in recent years, and in many cases it’s now less affordable than owning a home. So if you’ve been thinking about purchasing your own home, now is a great time to make a move.
The fact that fewer homeowners in the US are cost-burdened—and that you’re far more likely to be cost-burdened as a renter—is good news if you’ve been thinking about buying a home. Whether you buy or rent, the true key is to always try and keep your housing costs below 35 percent of your monthly income. In other words, live within your means. To learn more or to schedule a free buyer’s consultation, just call 775-400-6650 or email me at krisha@nvhomedreams.com