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Majority of homeowners now live in what is deemed unaffordable housing

Unaffordable housing across the board

According to the U.S. Census Bureau, rents are increasing while paychecks are not. Over half of Americans that rent put at least 30 percent of their household income toward rent while roughly 25 percent of renters pay out half of their income to their landlord.

The federal government says housing is unaffordable once it surpasses the 30 percent threshold, putting half of America in the dangerous range of paying more for rent than what the government deems unaffordable, and the ratio of renters in this category is growing.

Homeowners are not faring any better, as 38 percent of homeowners pay over 30 percent of their income on their mortgage while 15 percent spend at least half of their income on their house payment. More homeowners are now in the unaffordable range and this number is also rising, but at a slower pace than renters.

Rents are predicted to continue rising for an unforeseeable period with more homeowners losing their homes to foreclosures, selling their home as a short sale, or simply walking away, mobilizing a growing number of renters.

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American challenges

Unemployment continues to suffer and with one in three Americans saying job instability is a top obstacle to buying a home, it is likely that many renters fears relating to job stability.

As rents rise and mortgages reset, Census Bureau data shows housing is becoming less affordable no matter if one rents or owns.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

53 Comments

53 Comments

  1. Joe Rivera

    September 23, 2011 at 7:05 am

    "Cooperative Housing" is the answer to the housing problem. If people can't afford to rent or own any property on their own, they will have to form "cooperative housing groups". As long as they are still working, they can live in a "cooperative housing complex" where 2 or more families have their own bedrooms and bathrooms, but share large kitchens, dining rooms, and "family rooms". Older, large apartment complexes can be purchased and converted to "cooperative housing". "Cooperative Housing" is NOT Government Housing. It is a private, real estate investment entity, just like regular apartment complexes.

  2. Dan O'Halloran

    September 23, 2011 at 7:40 am

    Yikes that's pretty bleak information. If homeowners can get approved for a refinance that should make those payment ratios a bit better. Still can't believe we are talking about rates in the 3% range!

  3. Joe Rivera

    September 23, 2011 at 7:57 am

    There is no shame in renting versus "owning". Renting is always, always, cheaper than owning, no matter what the "experts" tell you. Your "american dream" does NOT have to be "owning" any property. Your "american dream" is living in a "reasonable" dwelling and putting a few extra bucks away for your retirement, which is MUCH, MORE IMPORTANT than living in a "pretty" property you can't afford anyway. Besides that, you really NEVER "own" any property that has a mortgage on it. The Bank owns your property. You are just paying "rent" to live there! You ONLY "own" property, when you buy it with CASH! If you can't buy it with CASH, rent instead!

  4. Greg Cook

    September 23, 2011 at 9:05 am

    Tara, another case for buying over renting.
    The figures are obviously based on gross income, while payments (rent or mortgage) are paid from net income.
    A homeowner can adjust their withholding to increase their disposable income while a renter doesn't have that luxury.

  5. Randy Pereira

    September 26, 2011 at 4:32 pm

    Very interesting report, but we need to do our own research for our respective location of expertise.
    Some areas it is cheaper to rent, than to own… other areas it is the complete opposite.

    It isn't about buying that "dream home"… but making the best possible investment decision for your short and/or longterm financial goals.

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