Housing Cost Burdens: 21% Of Us Homes Struggle, Single Moms Bear The Brunt [New Study]

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Housing Cost Burdens: 21% Of Us Homes Struggle, Single Moms Bear The Brunt [New Study]

May 15, 2023 | News | 0 comments

It is widely known that the ownership of a house can be a costly affair. While certain homeowners can easily handle their housing expenses, there are others who face the burden of high housing costs and are unable to cope.

The extent of being burdened by housing costs varies among homeowners. In general, individuals who allocate at least 31% of their monthly income towards housing expenses, which include mortgage payments, insurance, and utilities, are considered to be facing cost burdens.

Taking this into account, LendingTree conducted an analysis of data from the U.S. Census Bureau American Community Survey. The aim was to determine the proportion of owner-occupied households in each state that spend a minimum of 31% of their income on monthly housing costs.

Across the nation, there are millions of owner-occupied households grappling with the burden of high housing costs. Certain household types, such as those headed by single mothers, are significantly more likely to exceed their budget when it comes to housing expenses.

According to the findings of this research, individuals who allocate a minimum of 31% of their monthly income towards housing expenses are classified as burdened by housing costs. The rationale behind this classification is that households exceeding this threshold may have insufficient funds for savings or to cover essential expenses such as food, transportation, and credit card payments.

Nevertheless, it is worth noting that spending 31% or more of your income on housing costs does not necessarily spell doom. Certain individuals can maintain financial stability even when allocating a larger portion of their income towards housing, surpassing the commonly recommended limit.

In certain cases, households with minimal debt can allocate more funds toward housing, benefiting from fewer financial obligations. Similarly, individuals who don’t require a vehicle or have limited grocery expenses might manage with spending 31% or more of their income on housing. In some situations, it may be advisable to exceed the recommended housing cost limit if it ensures a safe and secure living arrangement.

It is important to note that this does not imply that homebuyers should freely overspend on housing without considering their monthly financial stability. The intention is to emphasize that each household has unique budgetary needs.

Ultimately, it is essential to maintain a manageable level of expenditure on housing. However, the definition of “manageable” varies for each individual and household. While it is generally advisable to spend less than 31% of monthly income on housing costs, it is not an absolute rule and should be adjusted based on personal circumstances.