Increase In Rental Prices Outpace Growth In Housing Values For The First Time In Ten Years.

The rental costs in the United States have surpassed the increase in home values, marking the first time since 2011, according to a recent report by the U.S. Census Bureau. The report highlights that nearly half of the country’s renter households, accounting for over 21 million households, face a cost burden as they spend more than 30 percent of their income on housing expenses.

The Census report further reveals that 49.7 percent of American renters are considered cost-burdened by the U.S. Department of Housing and Urban Development (HUD). With rental expenses exceeding 30 percent of their income, these households face financial strain due to housing costs.

In comparison, homeowners experience a lower median housing cost as a percentage of their income than renters. Homeowners with a mortgage spend 21.1 percent of their income on housing, while those without a mortgage spend 11.5 percent.

Property insurance has become a significant expense for homeowners, as stated in the Census Bureau report. More than 5.4 million out of 85.7 million homeowners in the United States paid $4,000 or more for homeowners insurance in 2023, with Florida having the highest number of such households.

The rise in rental costs and their burden on renters vary across different regions of the country. States like Arizona, Florida, and Georgia experienced significant increases in the percentage of renter incomes dedicated to housing. Arizona witnessed a 6.5 percent surge in rental costs, while Florida and Georgia observed increases of 8.2 percent and 6 percent, respectively.

In contrast, six states, namely Illinois, Kansas, Minnesota, New Mexico, New York, and West Virginia, saw a decline in the share of renters’ incomes spent on rent.

A higher rent burden not only makes it challenging to afford other essential expenses such as food and transportation but also hinders individuals from achieving their goal of first-time homeownership. Spending a larger portion of their income on rent makes it more difficult for renters to save for a down payment.