WASHINGTON—A new report by The Pew Charitable Trusts, “American Families Face a Growing Rent Burden: High Housing Costs Threaten Financial Security and Put Homeownership Out of Reach for Many,” shows that in the aftermath of the 2007-09 Great Recession, more households are “rent burdened”—that is, spending more than 30 percent of their pretax income on housing—than before the downturn. Such families are slower to transition to homeownership and are more financially fragile than those that spend less of their income on rent or own their homes.
Pew’s analysis uses the Panel Study of Income Dynamics, a data set of U.S. household finances developed by the University of Michigan, to explore how increasing rent affected households’ ability to accumulate savings and transition to homeownership between 2001 and 2015. The report also examines how the supply and demand of rental properties have caused prices to rise and how those increases have affected renters of various income levels, races, and age groups. Rent-burdened households typically find saving for the unexpected difficult and long-term wealth building, such as homeownership, even more elusive.
“We know that families can’t be upwardly mobile if they aren’t financially secure,” said Erin Currier, director of Pew’s financial security and mobility project. “Our data show that the rising number of rent-burdened households represents a population struggling to transition to homeownership and, more importantly, that a growing number of Americans are in a precarious financial state.”
Among the report’s key findings:
Pew’s report notes that policymakers focused on economic opportunity and financial well-being should consider ways to make renting more affordable for the about 17 million American families who pay more than 30 percent of their income for housing.
The Pew Charitable Trusts is driven by the power of knowledge to solve today’s most challenging problems. Learn more at pewtrusts.org.