Nearly half of renter households in the US were cost-burdened in 2023, paying more than 30% of their income towards housing costs, according to data from the US Census Bureau’s 2023 American Community Survey. The rising housing costs for both renters and homeowners highlight the severity of America’s home-affordability crisis. Between 2022 and 2023, housing costs increased, with the median cost of renting rising from $1,354 to $1,406 after adjusting for inflation, a 3.8% increase compared to a 1.8% increase in home values.
The survey shows that over 21 million households in the US are considered cost-burdened, spending more than 30% of their income on rent, mortgage payments, or other housing costs. The data also reveals disparities based on race, with higher percentages of Black or African American households and Hispanic households being cost-burdened in 2023 compared to the total population. Specifically, about 2.5 million Black households were severely cost-burdened in 2023, spending more than 50% of their income on housing costs.
Housing costs have soared in the years following the pandemic, driven by factors like the Federal Reserve’s near-zero interest rates in 2020, strong demand for housing due to remote work trends, and recent rate hikes bringing interest rates to 23-year highs. Home prices have remained high, and mortgage rates have risen as well. Mortgage rates and insurance costs are significant expenses affecting homeowners, with areas at higher risk of natural disasters like wildfires, hurricanes, and tornadoes experiencing greater insurance costs.
Renters in 2023 faced a higher cost burden as a percentage of their income compared to homeowners, according to the survey. However, the affordability of owning versus renting varies by location, with a July analysis from Realtor.com showing that buying a starter home was significantly more expensive than renting in the 50 largest metro areas in the US. Six states saw a decline in the percentage of renters’ incomes going towards rent in 2023, including Illinois, Kansas, Minnesota, New Mexico, New York, and West Virginia.
The rising cost of owning or renting a home has become a key issue in the 2024 US Presidential election, with both Vice President Kamala Harris and former President Donald Trump proposing plans to address housing affordability. Harris’s plan includes $25,000 in down payment assistance for first-time homeowners, while Trump has suggested banning mortgages for undocumented immigrants, a small portion of the mortgage market. The ongoing housing crisis highlights the urgent need for policy solutions to make housing more affordable and accessible for all Americans.
