One in 4 middle-income new homeowners — twice as many as a decade before — are buying into cost-burdened situations.
The share of middle-class Americans who are buying wallet-squeezing homes has more than doubled in the previous 10 years.
Almost 30% of middle-class homeowners bought homes with monthly payments costing more than 30% of their income in 2022, an NBC News analysis of Census Bureau data found. That’s more than twice the share from 2013, with experts warning it leaves many households with less money for groceries and emergencies and less able to get ahead in the future.
That “cost-burdened” benchmark — in which a household devotes over 30% of income to housing costs — is a widely used measure of affordability for both homeownership and renting. The Census Bureau measures housing costs against it, and the Department of Housing and Urban Development has used it for decades.
because 30% is an impossible amount to spend on housing anyway. If rent costs 50% of your income, then “only” spending 40% of your income on a mortgage payment is a massive step up. You’re also quite a bit less likely to have your mortgage payment suddenly increase year after year in the way that rent hikes, so getting into a slightly expensive mortgage early can pay dividends later if your wages increase annually.