Renters Vs. Homeowners: Why One Group Is Feeling A Bigger Economic Pinch
The current economy is putting the pressure on millions of Americans. ShutterstockNews that is entertaining to read
Subscribe for free to get more stories like this directly to your inboxThe real estate market has been kind of crazy in recent years with both home prices and interest rates hitting uncomfortable levels. As those figures start to moderate, researchers are gaining new insight on how homeowners feel about their finances compared to those who rent.
And the survey says…
A new Harris Poll survey found that renters were nearly twice as likely (57% to 29%) to describe their personal financial situation as “poor.”
So what’s going on? Experts say that renters feel as if properties are becoming less affordable while those who own their homes are basking in the knowledge that their investments are generally gaining value.
Of course, this isn’t true in every case, but by and large this seems to be a pretty good time to be a homeowner. But if you’re thinking about taking the plunge, be warned: The average mortgage rate for current homeowners is somewhere around 3.5%, but it’s roughly twice that high for people trying to get a mortgage right now.
It wasn’t always this way
What a difference an economic crisis makes. In the aftermath of the pandemic-related downturn, rental prices have quickly outpaced wages in communities nationwide:
- Almost half of all renters said they had been unable to afford at least one bill in the past month.
- The median rental price is a staggering 40% higher than it was before COVID-19.
- During that same period, hourly wages have only increased by about 20%.
- In 2022, the typical household had to spend more than 30% of its income on rent.
Following the 2008 economic crisis, however, housing prices dropped precipitously as the cost of rent stayed pretty much constant. In 2010, more than half of bankruptcy claims were made by homeowners — and now that number is down to just 23.4%.