While you have probably heard the saying that it costs more to own than to rent, the numbers from the 2009 Census dispute this commonly accepted axiom. In fact, according to USA Today, “more renters found housing unaffordable” than homeowners, who enjoyed relatively “stable” housing affordability. This analysis comes as a result of census statistics that indicate that more than half (51.5%) of renters are spending 30 percent or more of their income on housing costs. The government considers 30 percent of household income to be the indicator for unaffordable housing. In 2008, this number fell right at half.
Experts credit the poor job market with the decline in household income, and, according to Daniel McCue, a senior research analyst at the Harvard Joint Center for Housing Studies, higher rental costs are reflecting “a surge in demand as home foreclosures and short sales led many Americans to forgo homeownership in favor of renting.” Since 2008, 1 million new renters have entered the market and homeownership has dropped 0.7 percent.
While these numbers are good for the struggling multi-family housing commercial sector, they do not bode well for the overall economy, according to the study. The disproportionately large amount of the budget being set aside for housing means that renters will not be able to spend as much on “shopping, vacations and other discretionary items.” This type of spending accounts for 70 percent of the national economy. And the fact that 26.4 percent of renters are spending more than half their household income on housing makes the numbers even bleaker.
However, real estate investors are seeing the bright side of these numbers. One analyst is urging his audience to “take the [census] information and get those renters in your database off the fence!”. If these investors can pull that off and get these struggling renters into fixed-rate, affordable homes, everyone will benefit.