Some may think owning a home means having more financial stability than renting, but a recent report from Urban Institute says low-income homeowners are just as burdened by housing costs as renters. Housing shortages have sparked increasing home prices over the last few months and a higher share of homeowners and renters are facing affordability issues— a quarter of renters spending at least half of their income on rental housing compared to the 10 percent of homeowners. The generally lower income of renters normally explains this, but when Urban Institute studied the numbers, they found that homeownership doesn’t protect low-income homeowners.
Eight percent of homeowners have extremely low income, meaning 30 percent or less of area median income (AMI) . Seven percent of homeowners have low income, or 31-50 percent less of area median income. Ninety-two percent of cost burdened renters and 72 percent of cost-burdened homeowners fit in these income groups.
Though low-income homeowners and renters have similar rates of cost burden, there is a significant difference in the inhabitants. Poor, severely burdened homeowners tend to be elderly, while severely burdened renters tend to have young families.
“In the lowest AMI group, 37 percent have an elderly household head, and 57 percent have a child in their household,” Urban Institute reported. “But cost-burdened homeowners are approximately twice as likely as cost-burdened renters to be elderly (54 versus 27 percent), and renters are more likely to have at least one child under age 18 than homeowners (68 versus 38 percent).”
Renters certainly carry majority of the severe housing cost burdens, but according to Urban Institutes data, low-income homeowners struggle as well. Higher cost burdens for elderly homeowners reflect their low retirement salary, but Urban Institute urges we need to understand more about this group and what kind of impact the severe cost burden has on low income, elderly homeowners.