Just how stressful is paying your rent or mortgage? Very.
A new study from real estate brokerage Redfin found that 49% of Americans sometimes, regularly or greatly struggle to afford the cost of their housing. Most report making sacrifices, both small and not so small.
For example, the most common sacrifice was taking fewer vacations or taking no vacations at all. But some other sacrifices were more serious.
Twenty-two percent of this group reported skipping meals and 20.7% worked extra hours at their jobs. Another 20% said they sold some belongings.
Nearly 20% of those struggling to pay for housing resorted to borrowing money from family and friends and the same number have tapped retirement savings. Some said they even put off medical treatment.
“Housing has become so financially burdensome in America that some families can no longer afford other essentials, including food and medical care, and have been forced to make major sacrifices, work overtime and ask others for money so they can cover their monthly costs,” said Redfin Economics Research Lead Chen Zhao.
Potential political issue
“Fortunately, the country’s leaders are starting to pay attention, and homebuyers may get a reprieve in June if the Federal Reserve cuts interest rates, which would bring down the cost of getting a mortgage.”
Homeowners who purchased a home three years ago may not be struggling as much since their mortgage rate is around 3%. Recent homebuyers who overestimated their ability to swing a 7% mortgage may be the ones feeling the pain.
Renters may be in a worse situation since rents can – and usually do – go up. A February report by the Federal Reserve Bank of St. Louis shows rents have surged since the pandemic.
The February Consumer Price Index shows rents were up 0.4% from January and 5.8% over the last 12 months. Many consumers simply can’t keep up.