Millions Struggle With Housing Costs, LendingTree Study Finds

Over 18 million Americans reside in houses where their monthly expenses exceed what is deemed to be a stable financial situation.

The housing industry refers to 18.3 million homeowners as cost-burdened, or "house poor," meaning that they pay more than 30% of their monthly income on housing, including the mortgage, utilities, and other costs. This is the main finding of a LendingTree study that was released this week. A person is deemed extremely cost-burdened if their housing costs account for more than half of their monthly income.

West Virginia, Indiana, and Arkansas have the fewest home poor people, while high-cost states like California, Hawaii, and New York have the highest percentage of them, according to LendingTree.

However, according to Jacob Channel, senior economist at LendingTree, some people may spend more than 30% of their salary on housing and still be satisfied financially, thus homeowners who spend more than 30% of their income on housing aren't necessarily struggling to make ends meet.

However, many Americans find it challenging to control their housing expenses, especially in an environment when home prices have risen to all-time highs, mortgage rates are averaging 7%, and inflation is still rather high. According to Redfin, the median price of a home in the United States reached an all-time high of $394,000 this month, up 4.4% from a year earlier.

The analysis from LendingTree was based on 2022 U.S. Housing expenditures of owner-occupied households as reported by the census. The survey indicates a decline in the number of homeowners who are impoverished. Harvard University estimated that 19 million households were house poor or worse in 2023.

Effects on Quality of Life

Being cost-burdened significantly affects homeowners' overall quality of life, often leading to a range of mental and emotional stresses. Homeowners who allocate more than 30% of their monthly income to housing costs frequently experience heightened anxiety and stress due to financial instability. This pressure can lead to mental health issues such as depression and chronic stress, which may, in turn, affect physical health and overall well-being.

The financial strain of high housing costs also impacts family life. Many cost-burdened homeowners find it challenging to afford essential expenses such as healthcare, education, and nutritious food. This can create tensions within families as they struggle to balance limited resources. Additionally, the inability to participate in social and recreational activities can lead to feelings of isolation and a diminished quality of life.

Savings and future financial goals are often compromised for cost-burdened homeowners. The high cost of housing can make it nearly impossible to build an emergency fund, save for retirement, or invest in their children's education. This lack of financial flexibility can trap families in a cycle of economic hardship, making it difficult to achieve long-term financial stability.

The content provided on MoneyTimes.com is for informational purposes only and is not intended as financial advice. Please consult with a professional financial advisor before making any investment decisions.