Sunny days are ahead for middle-class American households.
Fewer renters and homeowners were cost-burdened in 2015 than in previous years, according to an analysis of American Community Survey data cited by the Wall Street Journal.
About half of all American renters spent more than 30 percent of their income — the threshold for what’s considered a “burden” — on rent in 2014, according to the analysis’ author Jed Kolko, a senior fellow at UC Berkeley’s Terner Center for Housing Innovation. In 2015, however, that rate dropped to just over 49 percent, the lowest it has been since 2008.
Accounting for both renters and homeowners, the overall percent of cost-burdened households fell from 34.6 percent in 2014 to 33.6 percent in 2015, thanks in part to growing incomes and low interest rates. The number of cost-burdened households have been declining for five consecutive years since its peak of 38.1 percent in 2010.
“The big jump in income between 2014 and 2015 helped owners and renters,” Kolko told The Real Deal. “And homeowners with mortgages got an additional boost from declining mortgage rates.”
Overall homeownership has been declining, however, the data shows. Only 949,000 new households created in 2015 — that’s down from the 1.2 million in 2014, though sales have been consistently rising in pace.
But single-family ownership posted an exceptional increase — the biggest year-to-year jump since 2007. In 2015, there were 65.7 million owner-occupied single-family homes, compared to the 65.2 million the previous year.
Kolko projects that this reflects the fact that families who lose their homes during the foreclosure crisis and subsequently became renters in the following years have finally become eligible to buy again. — Cathaleen Chen