Renters at a Disadvantage
Renters are seeing their budgets increasingly squeezed as incomes stagnate while homeowners are reaping the benefits of lower interest rates. An analysis from Zillow shows that renters are paying out a larger share of their incomes on rents – an extra $2,000 a year – while homebuyers need a smaller share of their income to pay their house payments.
In the third quarter of 2017, the median nationwide rental required 29.1% of median monthly income, up from 25.8% in the years leading up to the housing bubble. Payments on home loans required 15.4% of median income compared to 21% historically.
“In most markets, current renters are at a disadvantage compared to years past because paying the rent takes up a much larger share of their income than it did before,” said Zillow® Chief Economist Dr. Svenja Gudell. “For many people, that can mean less cash to put toward paying off student debt, building an emergency fund, or saving for retirement. For those hoping to buy a home, it could be a significant part of their down payment.”