Americans report skipping meals, working
overtime, and delaying medical care to afford housing
(NASDAQ: RDFN) — Half of U.S. homeowners and renters (49.9%)
sometimes, regularly or greatly struggle to afford their housing
payments, according to a new report from Redfin (redfin.com), the
technology-powered real estate brokerage. Many report making
sacrifices to cover their housing costs.
The most common sacrifice was taking no or fewer vacations. More
than one-third of homeowners and renters (34.5%) who struggle to
afford housing indicated that they skipped vacations in the past
year in order to afford their monthly costs.
But many people who struggle to afford housing made more serious
sacrifices: 22% skipped meals and 20.7% worked extra hours at their
job. A similar share (20.6%) sold belongings.
These responses are based on a Redfin-commissioned survey
conducted by Qualtrics in February 2024. The nationally
representative survey was fielded to roughly 3,000 U.S. homeowners
and renters. Most of Redfin’s report focuses on the 1,494
respondents who indicated that they sometimes, regularly or greatly
struggle to afford regular rent or mortgage payments.
More than one of every six people (17.9%) who struggle to afford
housing borrowed money from friends/family, and 17.6% dipped into
their retirement savings. Over one in seven (15.6%) delayed or
skipped medical treatments.
“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.
“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.”
Mortgage payments are near their all-time high due to rising
prices and elevated mortgage rates: The median U.S. home sale price
is up about 5% from a year ago, and mortgage rates are hovering
around 7%, not far from the 23-year high of roughly 8% hit in
October. The typical household earns roughly $30,000 less than it
needs to afford the median-priced home, and rents are on the rise
again.
14% of Millennials Dipped Into Retirement Savings to Afford
Housing Payments
Nearly one of every seven millennials (13.5%) who struggle to
afford their housing payments have dipped into retirement savings
to cover their monthly costs.
Most millennials are not retired, but housing affordability has
become so strained that some are resorting to outside-the-box
strategies to cover expenses. Millennials are the largest adult
generation, and many are aging into their homebuying years at a
time when home prices and mortgage rates are high.
The income needed to afford a starter home is up 8% from a year
ago, prompting some young buyers to use family money to cover their
down payment.
Baby boomers who struggle to afford housing were most likely to
dip into retirement funds, with over one-quarter (27.5%) saying
they did so to cover housing expenses. That makes sense, as many
baby boomers are already retired, and it’s common for retirees to
put their retirement savings toward housing.
Roughly 1 in 6 (15.5%) Gen Xers who struggle to afford housing
dipped into retirement savings to afford monthly housing costs. The
share was lowest among Gen Z respondents (6.5%), many of whom don’t
yet have retirement savings.
The IRS typically taxes people who make withdrawals from their
retirement accounts before the age of 59.5, but makes an exception
for qualified first-time homebuyers, who are allowed to borrow up
to $10,000 tax free.
Broken down by race/ethnicity, white respondents who struggle to
afford housing were most likely (20.7%) to use retirement savings
to cover housing costs, followed by Asian/Pacific Islander
respondents (14%), Hispanic/LatinX respondents (13.6%) and Black
respondents (12.6%).
Black Respondents Most Likely Work Extra Hours to Afford
Housing; Gen Zers Most Likely to Sell Belongings
While pressing pause on vacations was the most common sacrifice
for respondents as a whole, it wasn’t the top answer choice for
every demographic. People of color and younger generations often
made more serious sacrifices.
For example, Black respondents who struggle to afford housing
were most likely to say they worked extra hours (25.9%) to cover
their monthly costs, while Hispanic respondents were most likely to
say that they sold belongings (28.2%). Skipping vacations was the
most common answer among Asian/Pacific Islander respondents (43.8%)
and white respondents (39.6%).
Black millennials are half as likely to own homes as white
millennials, according to a separate Redfin analysis, though the
racial homeownership gap exists across every generation due to
decades of racist policies and discrimination.
When it came to age groups, skipping vacations was the top
choice for baby boomers (42.8%), Gen Xers (36.8%) and millennials
(31.3%) who struggle to afford housing. But for Gen Zers, the most
common sacrifices were working extra hours, selling belongings and
skipping meals, all of which clocked in at roughly 27%.
White Respondents, Baby Boomers and Homeowners Most Likely to
Afford Housing Easily
Of the roughly 2,995 people who took the survey, half (50.1%)
said they can easily afford their regular rent or mortgage
payments, and half (49.9%) said they sometimes, regularly or
greatly struggle to do so.
But the results vary by demographic. For example, 54.5% of white
respondents said they can easily afford their housing payments,
compared with 37.8% of Hispanic/LatinX respondents, 46.6% of Black
respondents and 47.4% of Asian/Pacific Islander respondents.
Baby boomers were most likely to say they easily afford housing
payments (61.9%), followed by Gen Xers (48.7%), millennials (40.2%)
and Gen Zers (26.9%).
And homeowners (59.9%) were roughly twice as likely as renters
(30.8%) to indicate that they easily afford their housing
payments.
To view the full report, including charts and a detailed
methodology, please visit:
https://www.redfin.com/news/homebuying-sacrifices-survey-2024
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
rentals, lending, title insurance, and renovations services. We run
the country's #1 real estate brokerage site. Our customers can save
thousands in fees while working with a top agent. Our home-buying
customers see homes first with on-demand tours, and our lending and
title services help them close quickly. Customers selling a home
can have our renovations crew fix it up to sell for top dollar. Our
rentals business empowers millions nationwide to find apartments
and houses for rent. Since launching in 2006, we've saved customers
more than $1.6 billion in commissions. We serve more than 100
markets across the U.S. and Canada and employ over 4,000
people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity
Home Loans®, Rent.™, Apartment Guide®, Title Forward® and
WalkScore®.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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version on businesswire.com: https://www.businesswire.com/news/home/20240405037007/en/
Redfin Journalist Services: Angela Cherry, 913-638-8249
press@redfin.com
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