August 13, 2019

How is Affordability Influencing Your Zip Code?

Housing affordability isn't only an issue for potential homeowners, it is also a challenge facing today's renters. In fact, a recent Freddie Mac survey of renters and homeowners shows that affordability issues continue to have profound impacts on both groups. And, over half of those surveyed reported having made spending or housing changes to afford their monthly housing payment. Let's breakdown the results.

Cutting Spending to Afford Housing

The survey shows that majorities of both renters (62%) and homeowners (47%) have made budget changes over the last two years to afford their current monthly rent or mortgage. These changes including reducing spending on essential and non-essential items or moving to a more affordable place to live.

Among renters who reported having trouble affording housing in the last two years:

  • 55% reduced spending on non-essential items.
  • 42% spent less on food, utilities and other essentials.
  • 44% reported having to move to find a more affordable place to live.

Among homeowners who reported having trouble affording housing in the last two years:

  • 52% reduced spending on non-essential items.
  • 33% spent less on food, utilities and other essentials.
  • 35% reported having to move to find a more affordable place to live.

Who is feeling these effects the most? Young millennials (aged 23-29) and members of the essential workforce (serving in crucial positions such as healthcare, education and law enforcement) reported the highest burdens with over 70% of homeowners and renters from both demographics reporting changes to their spending habits.

Choosing Different Housing

The survey also looked at how common costs of everyday life impact renters and homeowners. The two standout costs? Student loans and child care. Again, young millennials and essential workers were the top groups to report making a housing tradeoff to offset costs.

Student Loans: Student loan debt in the United States has more than doubled over the past decade with the federal reserve currently reporting over $1.5 trillion in federal student loan debt. Of the young millennials who rent, 51% made a different housing choice because of their student loan payments, whereas 38% of homeowners reported student loans influencing their housing decision. Student loans are causing a greater burden on the essential workforce with 51% of homeowners and 53% of renters reporting that they make housing decisions with their student loan repayment obligations in mind.

Child care: While child care costs vary and are influenced by where you live, how many children you have, their ages and the type of care provided, the average cost of child care has risen substantially nationwide over the past 30 years. For young millennials, 45% of homeowners and 31% of renters say they had to make different housing choices to afford daycare. By comparison, 50% of homeowners and 44% of renters in the essential workforce said the same thing.

The Big Picture

The way people decide where to live and whether to rent or buy is changing. Affordability isn't a problem facing only one region, demographic or generation. We know that rising home prices coupled with historically low levels of available housing inventory are making it harder to buy, and rents outpacing wages are making it harder to save. But, these findings highlight that the "costs of life," in particular the increase in student debt and child care costs over the past decade, are playing a major role in housing decisions.

  • Feedback

    Have a comment or question about this post? Email us to let us know what's on your mind.

    Maximum of 250 characters.