- A new survey shows that nearly half of homeowners with mortgages have gotten second full-time jobs.
- Homeowners say that owning a home is preferable to renting one, even as they struggle to keep up with costs.
- A vast majority of millennial homeowners said they have negligible savings after paying housing expenses.
During the pandemic, Americans scrambled to buy homes. Now they're struggling to afford to stay in them.
In a recent survey, 40% of homeowners with mortgages said they work second, full-time jobs to afford housing expenses. A majority of the 1,002 people surveyed by Consumer Affairs feel like they can't afford their housing expenses, and did not anticipate the extra costs of upkeep when they bought their homes.
The report comes amid record surges in US home prices, also finding that more than a third of respondents are incurring extra credit card debt to pay their bills. Despite these challenges, homeowners ultimately prefer owning a home to renting one.
The survey found that although 40% of people rely on second, full-time jobs to ease the costs of homeownership, nearly 100% of "house poor" homeowners have taken on side gigs to offset home costs. The survey defines "house poor" homeowners as having little savings left after paying their mortgages and associated monthly expenses. Overall, 69% of respondents considered themselves to be in this category.
That percentage of house poor homeowners was higher for millennials, who are currently the largest demographic buying homes after years of being shut out of the market. 78% of millennial respondents said they felt somewhat house poor.
Going through two recessions before their oldest members turned 40 and experiencing two housing crises, millennials are the slowest generation in American history to become homeowners, but they changed course by joining the pandemic homebuying boom. This year, millennials applied for more mortgages than any other generation: fifty-one percent of mortgage applications were submitted by those between the ages of 26 and 41, a CoreLogic report found last month.
The most common housing expenses homeowners underestimated are regular repairs (63%), regular maintenance/upkeep (60%), home insurance premiums (49%), and Homeowners Association fees (49%). 40% of respondents indicated that, in total, their housing expenses are more than they can afford.
In addition to more jobs, people have been siphoning off of other funds to pay their bills.
The survey found that more than a third of respondents — 36% — were taking on extra credit card debt to pay their bills. 29% of homeowners reported missing payments on other bills, and a quarter of them said that their monthly expenses sometimes exceeded their income. One third of respondents dipped into their savings and investment accounts to pay their bills, and 22% rented out parts of their home for additional income.
Homeownership is growing unwieldy, but people see it as the lesser of two evils
The US housing market is getting worse for buyers, which may explain the larger bite that a mortgage takes out of the average savings account. Between October 2020 and October 2021, the average price of an American home increased by 18%, according to CoreLogic's Home Price Index. That's the biggest increase in 45 years.
One reason the cost of homeownership is rising so quickly is that people keep buying houses. The median period a home spent on the market between July 2020 and June 2021 was just one week, down from three weeks a year earlier and marking a record low in data going back to 1989, according to the National Association of Realtors.
Paying for a home has been more difficult than expected for most homeowners — and financially strenuous for a good fraction of them. Despite these hurdles, most homeowners agree that their situation is better than the alternative: renting.
53% of homeowners said owning a home is better than leasing one, according to Consumer Affairs. Only 17% of them, however, view homeownership as "one of the best long-term investments."
There are a lot of scenarios in which renting makes more long-term sense than buying a home, as one financial planner told Insider. At the same time, the idea of avoiding a rent hike has been appealing for buyers in a pandemic climate where rent prices are also soaring.