According to a new report from Harvard University’s Joint Center for Housing Studies, 11 million Americans spend at least half of their income towards housing, a record figure.
The study found that an additional 10.3 million Americans spend at least 30 percent of their income on shelter, which equates to a total of 21.3 million individuals spending, at minimum, almost a third of their monthly income on housing.
This is significant because personal finance experts suggest budgeting about 30 percent of income towards covering housing costs.
It is believed that the influx in income spent on rent can largely be attributed to wages not keeping pace with housing costs. A proportional rise in housing costs can cause one to have to cut back in other areas financially, such as spending on food, healthcare, or clothing, along with saving money in a rainy day fund.
In the most expensive cities in the U.S., the situation is even more dire. In areas such as San Francisco and New York City, 75 percent of renters making between $30,000 and $44,999 a year and half of those making between $45,000 and $75,000 a year report spending at least 30 percent of their income on rent.
It’s important to note that being a renter has become increasingly popular in America amongst all demographics. The demographic group that has seen the greatest per capita increase in renting are those in a higher-income bracket.
Due to rising rent costs, becoming a homeowner has become a more viable option for many. The housing market is tight, but with high rents, it might be wiser for those with sufficient incomes to look into buying a property.