Renters now spend five percent more of their household budgets on housing costs than do homeowners, and the difference is growing as rents rise.
Since 2005, homeowners’ expenditures for housing have risen from 31.9 percent of their household budget to 33.2 percent, but renters’ costs have risen even more from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends.
Since 1985, homeowners have increased their housing expenditure allocation by 12 percent, while renters increased by 22 percent.
As consumers allocate more of their expenditures toward housing, they have less money to spend on non-housing consumption. The largest decline in a household’s budget occurred in transportation expenditures which fell by 17 percent and 22 percent since 1985 for homeowners and renters, respectively, CoreLogic said.
The increased spending allocation for housing, which is largely due to the stagnation of incomes among Americans of home buying age beginning in the 1990s, has actually contributed to the decrease in homeownership by making buying a home more difficult.
Demographics have also contributed to the decline in homeownership. For the 25 to 34 age group, the homeownership rate fell from 51.6 percent in 1980 to 42.0 percent in 2010. For 35 to 44 year olds, homeownership rates fell from 71.2 percent to 62.3 percent over the same time period.
The CoreLogic report also found that a significant number of foreclosures are remaining on the market for as long as four years or more. One out of five REO foreclosures (21 percent) are taking more than a year to sell. Nearly 10 percent, or 23,200 properties that were auctioned in 2006, remained in REO as of Q2 2010. In other words, these properties have been in REO continuously since 2006.