Rising rents are forcing renters to outspend home owners on housing costs, according to a new study.
Since 2005, home owners’ housing expenses have climbed from 31.9% of their household budget to 33.2%. On the other hand, in that same time period, renters’ housing expenses have jumped from 35.6% to 38.4%, according to the October 2011 CoreLogic U.S. Housing and Mortgage Trends.
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In the last 26 years, home owners have increased the amount they spend on housing expenses by 12% while renters have increased it by 22%, according to the study. As consumers allocate more of their income toward housing, they have less money to spend on non-housing consumption.
Earlier this month, Capital Economics economists noted that for the first time in 30 years the median monthly mortgage payment is about the same — or less — than the median rental payment.
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However, the increased spending allocation for housing by homeowners and renters, which is largely due to the stagnation of incomes among Americans of home buying age beginning in the 1990s, has actually contributed to the decrease in homeownership by making buying a home more difficult.
With the bleak job market, home ownership rates continue to fall in many parts of the country, particularly among younger generations. CoreLogic found in its report that the home ownership rate for the 25-to-34 age group dropped from 51.6% in 1980 to 42% in 2010. For the 35-to-44 age group, home ownership rates fell from 71.2% to 62.3% over that period.
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.Source: “Renters Outspend Owners on Housing,” RISMedia;
