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Declining Incomes, Rising Costs Put Pressure on Homeowners

According to a new Joint Center for Housing Studies (JCHS) at Harvard University blog post, the number of renters overburdened by housing costs reached a record high in 2021 as the first full year of the COVID-19 Virus flew past, the highest numbers seen since 2012. 

According to analysis of new Census Bureau American Community Survey data, nearly one-third of all American households—now accounting for some 40.6 million households—were considered “cost-burdened” with rent in 2021. 

Traditionally, a borrower is considered cost-burdened if their income-to-mortgage payment exceeds 30%. 

Most of the increase in cost burdens came from households who were severely burdened, or those who spent more than half of their income on housing. Fully 20.3 million households were severely burdened in 2021, an increase of 2.7 million from 2019. 

In the 20 years the JCHS has been collecting data, at no time other than 2021 have renters been in such a bind as 21.6 million households experiencing burdens, or 49.0% of all renters. The number of burdened renters had previously peaked in 2014 at 21.3 million households before declining slightly to 20.4 million by 2019. Of the overall 1.2 million increase in cost-burdened renters seen in 2021, 1.1 million of those were severely burdened (considered to be at the 50% income-to-rent ratio). 

“The significant increase in the number of cost-burdened renter households was in large part due to changes in the distribution of renter incomes since the beginning of the pandemic. Even after adjusting for inflation, the median income for renter households decreased from $44,500 in 2019 to $43,500 in 2021, a decline of 2.3 percent,” said JCHS Research Assistant Peyton Whitney. “Meanwhile, the number of lower-income renters making less than $30,000 annually increased by 223,000 households over that period, and the number of renters with incomes over $75,000 decreased by 280,000 households.” 

“This is a reversal from trends over the prior decade. Indeed, from 2010 to 2018, higher-income households accounted for over three-quarters of renter growth. Overall, this change in renter income distribution means there was a shift towards households that are much more likely to experience cost burdens, partially explaining the significant increase in burdened renters observed in 2021.” 

Stagnant, if not declining, renter incomes are only one side of this story. Even in middle-income households cost burdened renters rent at a rate of 62.7% of their monthly income. Among renter households with a real income under $30,000, fully 82.7 percent were cost burdened, a 1.6 percentage point increase from 2019. 

Click here to view the report in its entirety. 

About Author: Kyle G. Horst

Kyle Horst
Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].

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