Homeowners in America aren't the only ones struggling with an unaffordable housing market. Renters are also bearing the brunt.
A report from Harvard University's Joint Center for Housing Studies released last week showed that both homeowners and renters in recent years have become increasingly burdened by climbing housing costs.
The report, based on an analysis of existing data, said that nearly one in four households that own a home "are now stretched worryingly thin." The cost burdens are even worse for renters.
"For renters, the landscape is even more challenging," the Harvard report said. "While rents have been rising faster than incomes for decades, the pandemic-era rent surge produced an unprecedented affordability crisis."
Renters who spend more than half of their household income on housing and utilities rose in 2022 to a new record high of 12.1 million, up 1.5 million from levels seen before the Covid-19 pandemic. Allocating such a high proportion of household income to rent makes them vulnerable to becoming unhoused if they face an unexpected financial issue, such as an unexpected medical bill.
That's all part of a broader struggle in the US housing market, and recent data shows that it hasn't gotten any better. A persistent lack of homes available for sale is spurring bidding wars. Elevated mortgage rates are keeping sellers and some buyers on the sidelines.
"Housing costs are a particular pain point for American households," Lael Brainard, director of the White House's National Economic Council, said Thursday at an event in Washington.
"Congress really does need to act here," she said. "The Senate could act tomorrow and we would have tax credits for 200,000 additional affordable units," referring to a bill that recently passed the US House.
Speaking at an event hosted by the Urban Institute, Brainard outlined the Biden administration's attempts to fix America's housing market, such as a cap on annual rent increases for the 2 million households in "low-income housing tax credit" units and a reduction in Federal Housing Administration mortgage insurance premiums that took effect in the spring.
"Already, nearly 700,000 homeowners are saving roughly $900 annually as a result of the Administration's reduction in mortgage interest premiums for FHA-backed loans," Brainard said.
The Harvard report said that "state and local experimentation with regulatory reforms and incentives will incrementally add affordable homes" and that there's a pressing "need for down payment support and access to low-interest mortgage products to close racial gaps and put homeownership within reach for households with modest incomes."
