Cost-Burdened Middle-Class Homeownership Doubles in 10 Years
One-third of homeowners are spending more than 30% of their income on housing costs.
Nearly 30% of middle-class homeowners have bought homes with monthly payments encompassing more than 30% of their income for 2022, a share that has more than doubled over the past 10 years. This trend is leaving more and more households with less money to spend on necessities, maintain their homes and save for emergencies.
The findings are part of an analysis of Census Bureau data conducted by NBC News.
Spending 30% or less of income on housing costs is a benchmark used by government agencies to measure the affordability of homeownership and renting.
Many middle-class homeowners are accepting a higher housing cost burden to escape sub-par rentals or to accommodate growing families. However, homes that first-time home buyers and middle-class families can afford often sell quickly and to cash buyers, the NBC News report found. This dynamic has prompted many homeowners to make sacrifices in other areas to prioritize paying for housing costs. A large portion of potential homeowners are left on the sidelines.
Record home price growth is one cost driver of housing cost burdens, along with rising property taxes and insurance premiums, according to Daniel McCue, a senior research associate at Harvard University’s Joint Center for Housing Studies. Adding high interest rates to the mix has made homeownership unaffordable for many middle-class households even with income rising more than 50% over the past decade.
“All these costs are exposing who’s on the margins in terms of paying for their homes,” McCue told NBC News. “You look at households earning less than $30,000 a year — it was something like 95% of older adults were cost-burdened.”
Single parents as well as Black, Hispanic and Native American households are also more impacted by cost burdens.
Cost-burdened homeowners may struggle to keep up with home maintenance, leading to unhealthy or unsafe living environments, said McCue. This could negatively impact nationwide housing stock, which already needs $150 billion in repairs, the report said.