Half of U.S. Homeowners and Renters Struggle to Afford Their Housing Payments

https://www.businesswire.com/news/home/20240405037007/en/Redfin-Survey-Half-of-U.S.-Homeowners-and-Renters-Struggle-to-Afford-Their-Housing-Payments

by okasaki • 2 years ago

49 88 2 years ago

businesswire.com

game_the0ry8• 2 years ago

It's unfortunate how much people need to sacrifice to afford housing.

And I dont know how else to read this except -- home prices will go down.

PKop3• 2 years ago

That and/or rates

game_the0ry8• 2 years ago

Why would the fed cut rates?

jncfhnb6• 2 years ago

Seems like a terrible bet

tigeroil• 2 years ago

Indeed. Everyone I've spoken to seems to be convinced that clearly, something has to change, house prices must drop, but the reality is, there's too many people for too few houses, and unless that changes housing will always continue to become more expensive.

acover• 2 years ago

It can always get worse. Lots of counties live with price to income ratio of 20. The USA is 6.

game_the0ry8• 2 years ago

Indeed, I see you're point.

We americans have been living beyond or means and much better relative to the rest of the world, and the world is starting to equalize. Makes sense.

spdustin• 2 years ago

I respectfully urge any commenters to consider that a good portion of us HN readers are in this 50%, despite living outside of the valley.

TexanFeller• 2 years ago

The most common sacrifice was taking no or fewer vacations. More than one-third of homeowners and renters (34.5%) who struggle to afford housing indicated that they skipped vacations in the past year in order to afford their monthly costs.

Vacations, at least the kind where you travel somewhere, are the definition of luxuries. It's jarring to hear about skipping them adjacent to a paragraph about skipping meals. I went on only a handful of vacations growing up, all of them staycations or domestic road trips with some other reason for going there or with someone else paying.

swatcoder3• 2 years ago

Yeah, lifestyle expectations have shifted dramatically and many people have become strongly attached to consumer luxuries and extravagences.

If you watch or read older media (fiction or non), or if you lived through it, you regularly see even middle class and professional characters living with sparse conveniences in their home and going on exactly those sort of modest road trips and motel stays you talk about and many of us remember. Trips to faraway lands, were treated as a novelty that you might bucket list once or twice rather than an annual necessity. You didn't buy a new TV until the old one broke. You talked to your neighbors and borrowed each others tools. You ate out as a treat, not because you just didn't feel like cooking that day. You planned your grocery shopping around sales and strove not to deviate from the plan while at the store.

And these expectations shifted for everyone, not just incoming generations. It wasn't a generational divide and I don't mean to stir up boomer/zoomer tension -- it was a dramatic cultural shift that almost everybody seems to have adopted without even noticing.

Exagerrated consumerism and "we are all middle class on the inside" mentality was how the West distinguished itself from its Cold War villian and now we are where we are.

Everybody needs an often-unattainable and generaly-unsustainable amount of money to fulfill a life that few would have taken seriously just a few decades earlier, and the essential dissonance is producing widespread misery and angst.

babycheetahbite• 2 years ago

Very well put. People simply don't recognize the standard of living they enjoy, because "everybody" has it.

mullingitover3• 2 years ago

Counterpoint: a friend of mine grew up in LA. His family, consisting of his parents and his brother, took a month long road trip vacation every year. They owned a home that is now valued at around $2 million.

They did all this solely on his father’s income, which he earned as a public school teacher.

The middle class has been gutted in the past 40 years.

jncfhnb6• 2 years ago

That’s just bad data storytelling. What’s more likely, that these people were planning extravagant vacations that they had to cancel? Or that they simply cannot afford vacations, and when asked if they “skipped” vacations “for monthly costs” they said yes.

rixthefox• 2 years ago

Curious then to hear your thoughts then. If a person can't afford "vacation" what incentives do they have to take them then? Fundamentally you're saying that vacation days should be used like sick days.

So in reality the only people who can afford to have a real vacation are the ultra rich? So people like Elon Musk who feel like the world owes them attention because they are richer than any of us combined and have this constant need to flex that wealth to "own the poor" are okay?

Meanwhile these same rich people will have a heart attack if you so much as dare ask for a living wage that adjusts for inflation. How dare you take away their hard earned money? Right?

bradfox2• 2 years ago

What is a 'real' vacation?

If it's laying on the beach for a week in Hawaii, or traveling through France, those are luxuries that should not be annual expectations.

Vacation just means having time to periodically not work for a living. Anything above that historically has been earned as a rare experience, but today is unrightfully expected.

Like OP, we went camping or to visit extended family once a year. Instagram vacations to the beach were what the rich families did.

Buttons840• 2 years ago

Maye people simply have fewer vacation days.

Objectively, vacation days have declined and home ownership happens later in life and people have fewer children (and more have fewer children than they want).

We're doing the same work and getting less for it.

gruez• 2 years ago

Objectively, vacation days have declined

Source?

We're doing the same work and getting less for it.

If you're talking about absolute amounts, this is directly contradicted by the BLS data.

https://fred.stlouisfed.org/series/LES1252881600Q

maerF0x0• 2 years ago

I've felt similarly about tattoos. I've never understand someone complaining about their student debt when they've been to a dozen or so countries, or have $20K of tattoos on their body, or spend more on door dash per week than I do on food per month.

I do think for some people the number gets too large and it becomes abstract. $100K debt and they think "I'll never pay this off" while they spend $1000 a month across discretionary extras.

pelagicAustral3• 2 years ago

I was on the verge of buying pre-Covid era. I was going to end up paying mortgage for 20/25 years. My plan was a small 2-bedroom bungalow, I was still considering then, that I was going to pay quite a lot for what I wanted... Covid happened, prices went to the roof and beyond... I'm not buying squat right now, no way... Prices remain just the same, it's funny when they go up they go all the way up as high as they can push it, when then come down you can't even feel they did.

I'm scratching 40s and I think my new plan is to go somewhere else... save for the next decade and move to Northern Africa, which I love and have ties to... Retire there and work remotely, or teach or a combo of those... I hope it works, even if it doesn't beats the crap out of grinding my whole life for a small pod in the west.

cpursley2• 2 years ago

I’d like to check out North Africa. Any suggestions on good cities (safe, clean, fast internet) with ocean access?

pelagicAustral3• 2 years ago

Not going to lie here. It was shocking at first, the cultural clash was intense at first, and I was like a scared child wandering about... But afterwards I felt much more at home than at any other place I've lived before (including where I live now). People are very nice, they are gentle, sincere, humble and welcoming (in general). Just this is enough of a reason for me to move, really...

I recommend Morocco or Tunisia. They have some amazing cities, and you will miss none of the fun you get in western countries, the vibe is different but it is far safer, people don't drink to nuke their brains out, and yes, there are pubs, mainly in tourist hubs...

In Tunisia you will love Tunis, Nabeul, Djerba, Monastir... All places are living postcards. Cost of living is extremely good. Nice house near the coast is about $300/400 US for rent. Food is amazing.

lesuorac• 2 years ago

I think there's a few ways to think about this.

1) You're competing in an auction for the house so if you make 75th percentile income and only willing to spend 20% of your income on a house than anybody in the 50th percentile and higher whose willing to spend say 40-50% of their income will out bid you.

2) Interest rates do make a big deal when buying a house. A 250k house @8% is a 1.8k monthly payment (21.8k/yr) while that 250k house @4% is ~1.2k and @2% is ~900. So if you can afford spending 1k/month on a house then @2% that house is 270k, @4% that house is 210k, and @8% that house is ~140k.

2a) So you could buy a 270k house @8% and be paying ~2k/month in hopes of the interest rates to drop to 2% and then refinance to pay ~1k/month but I'm risk-adverse so I don't condone that idea unless you can stomach 2k/month.

I'm guessing without rising interest rates we wouldn't actually see the housing market cool down.

Fauntleroy• 2 years ago

Oh nice, where are these 250K houses?

subpixel• 2 years ago

You’re close to the age where the realization sinks in that access to world-class health care, both emergency and otherwise, is near the top of your priorities.

I have a place overseas I want to escape to but I think about what would happen if I had x or y entirely probably health emergency. I have family there so I dont’t have to use my imagination.

FooBarBizBazz• 2 years ago

I have mixed feelings about this.

Most health care can be had more affordably outside the US. There are places where it is relatively cheap and relatively high quality. In fact, life expectancy is lower in the US than it is in, even the UK, at every income level. So for some level of medical care you may actually do better outside. Granted, if you get cancer you probably want to return to the US.

And you do trade time, life, sedentary time at a desk, for the money that pays for the location. What happens if you work less, go someplace cheaper, and use your decreased stress and increased time to look after your health more?

I'm not sure about any of this.

drewcoo2• 2 years ago

If the lettered variable were really bad, you'd go to a local (within several states) trauma hospital.

You don't worry too much about PCP-in-network at that point.

We could, of course, have very different notions of "health emergency."

mattbrewsbytes• 2 years ago

There are some areas where it doesn't make any financial sense to own real estate in comparison to renting for the purposes of having a place to live. If you owned a few years back that would be different since you might have a 3% mortgage and have bought for 50% less than today's prices.

Many people compare a mortgage to rent but that's not a fair comparison. Homeowners should calculate an additional 10-20% of their mortgage to save for maintenance, repairs, etc. At some point major systems of the house will fail - HVAC, roof and windows are big ticket items. When you're renting you just call the landlord and say "the upstairs bathroom or the water heater or something is leaking water into the ceiling" - you are inconvenienced. If you own the place, you are acting as the general contractor attempting to triage the problem find a plumber or maybe an HVAC person, maybe they are flakey and don't show up, maybe they do good work, maybe their quotes are outrageous, etc.

Then there is just general maintenance and upkeep on top of the redecorating that most people like to do like paining rooms different colors and having more space, typically, that gets filled with stuff. You go from 3 rooms in an apartment to 7 rooms in a house and you'll definitely spend more money on filling the 4 extra rooms, maybe with stuff, maybe with people (kids) or both.

ryathal• 2 years ago

The price will always go up in most long terms. It's going to require massive population decrease within an area to actually drop prices. If you are going to live somewhere for about 5 years buying is worth it financially.

johnchristopher• 2 years ago

I'm not buying squat right now, no way... Prices remain just the same, it's funny when they go up they go all the way up as high as they can push it, when then come down you can't even feel they did.

HNomics tried to convince me that inflation didn't matter and rent/sale prices actually go down when you consider your salary beats inflation. Your salary beats inflation, right ?

spamizbad• 2 years ago

We've been underbuilding housing for quite a while in the United States. The GFC in 2008-2009 also spooked a bunch of people and convinced far too many people that another residential real estate crash was right around the corner. COVID happened and many people who were holding out lost their nerve and scrambled for housing, driving prices even higher.

First time in my life where asset doomerism actually made something more expensive.

toomuchtodo• 2 years ago

https://www.fanniemae.com/research-and-insights/perspectives...

cma• 2 years ago

The US has one of the highest square footage per capita of housing in the world. So maybe less underbuilding and more of a misallocation of the square footage.

CalRobert4• 2 years ago

So long as there are more home seekers than homes people will be in competition with their peers for homes. But maybe that's the idea? If people felt secure in their home then maybe they wouldn't work so hard, perhaps switch to a 4 (or 3!) day work week, maybe get more involved in their community, volunteering, advocacy, etc.

And that would, presumably, be a disaster. We apparently need everybody working as hard as possible so that capital owners can take a share of our labour. It is hard not to feel like housing scarcity is the primary tool to keep everybody working at capacity, and all for the benefit of the few.

Of course, when people shriek about capitalism they're usually imagining Scrooge McDuck or something, but in this case the beneficiaries are mostly old homeowners. And when it's your grandma saying "that's my nest egg!" about how great high home prices are, it's harder to fix the problem. Grandma wonders why her kids live 5,000 miles away, though. At least my kids' grandma does.

For a few years I had a paid off house in the middle of Ireland. (The house was dirt cheap). Sadly it was not a great place for me to live - we did not get on well with the neighbours, among other things - but the feeling that I could tell my boss to go to hell and live for literally multiple years on a single income's worth of savings was powerful.

We ended up moving to the Netherlands, which is much better for me overall (I have a lot more in common with the people here, and love biking!) but yet again I need to stress about mortgages, rent, etc. etc. and I miss the freedom I had.

azinman2• 2 years ago

Are you suggesting some great conspiracy with developers and banks to make less money on purpose by fixing supply in order to have a working style that hypothetically benefits a few unrelated people?

CalRobert4• 2 years ago

No, I think that homeowners largely have the ability to make it illegal to build new homes near them, which makes them wealthier. Sometimes it's for reasons like noise, parking, etc. (though I don't really think "it's illegal for you to build a home here because I like free street parking" is moral, but that's another matter), but sometimes it's because new homes - especially apartments - are likely to reduce the cost of housing (aka "bring down my home's value").

If you own a home, you want as many people working as hard as they can to outbid each other when you sell.

the_snooze3• 2 years ago

Is this a trend that's going up? It seems like the norm for the past several years (at least) is for a good chunk of Americans to live paycheck-to-paycheck [1] and not have much of a financial cushion [2]. There's just a lot of precarity out there, whether by choice or by circumstance.

[1] https://www.npr.org/2020/12/16/941292021/paycheck-to-paychec...

[2] https://abcnews.go.com/US/10-americans-struggle-cover-400-em...

gamepsys2• 2 years ago

Have you ever noticed you never see anyone plot the percentage of Americans living paycheck-to-paycheck over time? It's because the number is surprising stable, and always too high.

westpfelia• 2 years ago

citation that it is stable? Considering that pay has been flat since the mid 2000s, mortages/rent has skyrocketed, price of everyday goods has sky rocketed, and the debt bubble is getting bigger and bigger I find it hard to believe that line is flat.

adolph3• 2 years ago

What's the point of not living paycheck to paycheck if interest rates are low and inflation relatively high? Holding cash just wastes it.

(Note: this is not my personal viewpoint and is not financial advice. It is asked to fairly portray a counterpoint which most people must hold, even if only implicitly.)

the_snooze3• 2 years ago

You don't hold it all cash. You stick most of it in investments and let long-term market trends smooth out day-to-day volatility. It's easy enough to cash out non-retirement investments in case you have need for a big expense like a home purchase or riding out longer-duration job loss.

For the bit of cash you do hold onto, that's a buffer against random short-term life events: home and car repairs, medical expenses, etc.

If you spend all your money down, your life becomes brittle to everyday shocks. Money buys security: you can actually make plans and stick to plans if you have a financial cushion. It's the opposite of precarity.

Izkata2• 2 years ago

I think I remember reading this stat used to be fairly stable around 20-30% in 2019 and earlier.

tocs32• 2 years ago

In, at least the area I live (Central Texas), property taxes are also a problem with home affordability. I got my tax assessment a couple days ago and it notes that the assessment is up 653.08% since 2019.

cmmeur01• 2 years ago

I mean where do you expect your services to come from if there is no state income tax?

ProllyInfamous• 2 years ago

GA has both income tax and sales tax (and property taxes way less than Texas'...). A recent statewide proposal is considering capping home assessment increases at a set rate, pegged to inflation — until the house sells to a non-family owner.

I think all three ideas are GREAT for Joe Average Georgian.

tocs32• 2 years ago

Except, I am not getting 653% more service. Traffic is worse, roads are worse (except the brand new ones), crime is higher, schools are more crowded. No public water for me. It is admittedly the price of growth in the area (recently rural area). I understand that government and taxes are good, up to a point. The extra taxes are bringing more people in but not helping those who are already here.

silverquiet• 2 years ago

South Texas here and I have to say that the whole low-tax red state thing seems very oversold. We sure get the culture war stuff good and hard though (and even a few years ago I would have said that Texas was actually governed by the more pragmatic wing of the Republican party, but no more).

tayo42• 2 years ago

How does that opening quote about rates make sense? Rates go down people can afford bigger loans, prices should go up for the same loan payment.

commandlinefan2• 2 years ago

I bought in 2010, when interest rates were low, and my payments are almost comically low by 2024 standards. BUT - the taxes are going up so fast, they've almost caught up with the actual mortgage payment (I pay as much in tax & insurance as I do for the house payment itself), and there's no end in sight.

taftster2• 2 years ago

Right, this is such an underappreciated problem. Buying a home doesn't "lock in" your monthly costs. It locks in the mortgage, sure. But it's very easy for your insurance and property tax rates to surpass any growing income.

This is particularly bad for fixed-income folks, living in retirement. Congratulations, you've saved and scrimped to get your house paid off by retirement age, but rising property taxes are outstripping your social security income.

commandlinefan2• 2 years ago

Well, at least where I live, property taxes are capped once you hit 65, as long as you stay in one place. I'm a LONG way from 65, though (fortunately).

adolph3• 2 years ago

The most common sacrifice was taking no or fewer vacations. More than one-third of homeowners and renters (34.5%) who struggle to afford housing indicated that they skipped vacations in the past year in order to afford their monthly costs.

This makes the headline verb "Struggle" seem overly dramatic.

Izkata2• 2 years ago

For comparison, I think this usually floated around 20-30% in 2019 and earlier.

api• 2 years ago

I’m a very strong subscriber to the housing theory of everything.

To summarize: most of the malaise in developed economies especially among the young is due to housing prices.

A lot of the other issues we face including inflation in other areas is downstream of housing prices since expensive housing drives wage inflation. That wage inflation doesn’t end up benefiting the worker much though because it’s all eaten by housing. This bids up housing even more in a vicious cycle.

A lot of social problems are also downstream of housing: alarmingly low birth rates, depression to some degree, the decline of in person socialization due to the death of “third spaces” (too expensive), parents and grandparents becoming a burden on the young because they can’t afford to live, etc.

Failure to build sufficient housing to meet demand is literally destroying civilization.

You can see this most clearly in certain cities like SF that have this disease worst of all, but it’s a problem everywhere.

Half of U.S. Homeowners and Renters Struggle to Afford Their Housing Payments

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