2023 Study: Majority of Renters Priced Out of Homeownership in 78% of All US Metros

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Key Findings

  • 63% of renters across the biggest U.S. metropolitan areas are priced out of home ownership (up from 61% last year)
  • The majority of renters can’t afford to own a home where they live in 205 out of 260 metros (78%)
  • At least 90% of renters are priced out of home ownership in 16 American metro areas, nine of which are in California
  • In two metropolitan areas, Prescott, AZ and San Luis Obispo-Paso Robles, CA, less than 1% of renters would be able to afford buying and owning a median-priced home
  • Kalamazoo-Portage, MI, Jackson, MI, and Johnstown, PA are the only three metros where more than 80% of renters could afford to own a home

In 2022, a study by Porch, a nationwide home-service company, found 61% of renters in the U.S. were priced out of homeownership, meaning they were not able to afford to buy and own a home in the same city where they rented. 

In 2023, applying that study’s same methodology to the most recent home-owner data resulted in an estimate of 63%. In other words, today, nearly two-thirds of renters can’t afford to buy a home in the metro where they live.

To gain a better understanding of this huge number, we examined housing affordability by comparing renter incomes to home prices using the most recently available data for 260 metropolitan areas in the United States.


Home Prices Have Dropped, Why Aren’t Homes More Affordable?

home ownership study porch hireahelperEven though home prices have been falling for the better part of last year and then continued their decline in 2023, housing affordability hasn’t improved. In fact, things have gotten worse for prospective homeowners over the last year. 

At the end of last year, the National Association of Realtors’ Housing Affordability Index reached its lowest point since 1965. It hasn’t been this hard for a family with an average income to qualify for a mortgage loan on an average-priced home in over six decades.

Why hasn’t a drop in home prices led to greater affordability? 

For starters, mortgage interest rates are at 6.65% according to Freddie Mac — the highest they’ve been since the Great Recession. This means potential mortgage repayments for buyers would be a lot higher than they would have been even just a few years ago.

 

“It hasn’t been this hard for a family with an average income to qualify for a mortgage loan on an average-priced home in over six decades.”

 

Secondly, there aren’t enough affordable starter homes. In part, that’s because there are simply not enough homes for sale in general after a pandemic buying frenzy. On top of that, there is simply put, a lack of cheap new homes. Roughly 63% of all U.S. homes were selling for over $400,000 by the end of 2022.

Finally, there’s the pervasive issue of inflation and the increasing cost of goods, services, and rent, leaving less money in Americans’ pockets. Despite dropping to 6.5% in recent months, it’s still way higher than the pre-pandemic 1-2% rate.

Now that we know more about why housing is less and less affordable, let’s get into where all this leaves American renters wanting to buy a home in 2023.

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Further Out of Reach: The Majority of Renters Can’t Afford To Own a Home in 205 out of 260 Metros

To estimate the percent of renters priced out, we assumed a scenario where a first-time buyer put down 6% of the home value, obtained a 30-year fixed-rate mortgage with a 6.65% interest rate (an average rate), and aimed to keep mortgage repayments to a maximum of 30% of the household income, as per the famous Housing and Urban Development guideline.

 

“…in two major U.S. metropolitan areas, the share of renters priced out of home ownership is a staggering 99%!”

 

With current income levels and home prices, this scenario is completely unattainable for the majority of renters in 205 out of 260 metropolitan areas in the United States. That’s in nearly eight out of the ten (78%) most populated areas in America where renters have no realistic chance at home ownership.

 

In the Porch study from 2022, there were 184 metros where home ownership was unaffordable for 50% or more renters living in them. 

This overall increase seems to suggest the affordability crisis isn’t just deepening in areas already struggling with affordable homes, but is actually expanding to more metropolitan areas across the country.

Mission Impossible: In Two Metros, Home Ownership Is Unachievable for 99% of Renters   

Last year’s study uncovered 13 major U.S. metro areas where at least 90% of renters wouldn’t have been able to afford home ownership based on their income. This year, there are 17 of them!

What’s different about this year’s findings, however, is that in two major U.S. metropolitan areas, the share of renters priced out of home ownership is a staggering 99%!

Those areas are San Luis Obispo-Paso Robles, CA and Prescott, AZ, where the home prices are prohibitively high to be affordable for the absolute majority of people who rent in these areas. Homes in San Luis Obispo and the area being unaffordable is nothing new, but affordability dropping in Arizona and Prescott, AZ specifically is something that’s started happening recently, according to local reports.

 

Of the 17 places in the U.S. where the income of 90% of renters would prevent them from being able to afford a home, nine are in California with cities like Los Angeles (94.3%), Salinas, CA (92.9%) and San Diego (92.6%) all with an appearance on the list.

Hawaii and Colorado each have two metros on this list, but, rather surprisingly, so does Charleston-North Charleston, SC, where some 91.6% of renters are priced out of home ownership. Turns out, housing has been too expensive in the area for a while, but the local government does seem to be stepping in and building more affordable homes, according to reports.

The Modest Midwest: Two Michigan Metros Among Three Most Affordable Places for Renters

Like last year, Johnstown, PA leads the pack in terms of affordability of local housing for those on typical renter incomes. Nearly 90% of people who rent in the area earn enough to cope with the costs of home ownership if they were to buy a home in the area.

The only two other metropolitan areas where owning a home without repayments crosses the affordability threshold of 30% of the household income are in Michigan. Those places are Jackson, MI, (11.9%) and Kalamazoo-Portage, MI (13.3%).

Looking at the 10 most affordable areas for renters looking to jump onto a housing ladder without it breaking the bank, five are either in Michigan or Illinois, while a total of three exist in Pennsylvania.

See All the Data for Yourself

To see how affordable homeownership is for renters in your city or metro, check the table below. 


Methodology, Data Sources, Calculations and Assumptions Made

Income levels of renter households and their % of all households in each metropolitan area were taken from the 2022 release of the Annual Social Economic Supplement to the Current Population Survey, as available via Integrated Public Use Microdata Series (IPUMS). Home prices were taken from Zillow.
% of renters “priced out” was calculated as the percentage of renters in each metropolitan area whose income wouldn’t be sufficient to keep potential mortgage repayments to 30% of gross monthly income (Source: United States Department of Housing and Urban Development). 
Mortgage repayments were estimated using the following assumptions:

Illustrations by Daniel Fishel

The Important Things to Take Pictures of While Moving (and Why)

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Getting ready for the big move? Don’t pack that camera away just yet!

Besides getting those great social media shots (“I’m driving a U-Haul, everybody get off the road!”), taking pictures before, during and after your move can help protect your stuff – not to mention your wallet.

The main reason for taking pictures when you move might be obvious, but it is worth iterating. No matter how skilled, experienced and careful your movers are, accidents do occasionally happen. And if you don’t prepare, you may not be properly reimbursed for damage that occurs.

So before your movers show up, go around and take pictures of anything and everything you deem valuable. This means furniture, electronics, breakables and anything else you think would be difficult and/or expensive to repair or replace. Then when your move is complete and you find that something has been damaged, you will have proof that the item was in fact damaged in transit.

 

What Moving Insurance Actually Does

(And why it might not help you!)

This also means taking pictures of existing damage: a scratch on your kitchen table, a dent in your dryer, or a small crack in the corner of your mirror. Why? Because if you suddenly find a bigger scratch, a deeper dent or a longer crack, your movers can say “That was already there.” “Yes, but it’s much worse now!” you will cry. And you will lose.

Knowing all that, here are some crucial tips for everything you’ll especially need to take pictures of.

Take photos of your cleaned-out apartment.

Believe it or not, there are some crafty landlords out there who would love to pocket your security deposit. Taking pictures of your old place before you leave for good can help you defend yourself against false claims of damage. And if you did damage something? Take a picture of that too, so that same unscrupulous landlord can’t charge you hundreds of dollars for fixing a couple of nail holes.

Protip: Take pictures of the bathroom and the shower. Yours truly got nailed for leaving the toilet “a filthy disgusting mess” after moving out of his Boulder, CO apartment, even though it was sparkling and sterile when I locked the door for the last time. I don’t even want to know.

Likewise, take pictures of your new place.

Again, don’t just photograph any existing damage you may find. Photograph everything! Why? Because walls, doors and light fixtures (and door jambs and floors and ceilings) can suffer damage during the move-in process. Your movers might be a great bunch of professionals, but you probably won’t want to have to pay for the gash they accidentally put in the kitchen floor.

Protip: Also take pictures of your rental truck! Get shots of any existing damage, inside and out, as well as the general condition of the interior of the cab and the back where all your stuff will be going – especially if these areas are less than pristine.

Take a picture of the back of your TV, for reference.

You know all those dusty wires back there? The ones to your surround sound system and your Blu-Ray player and your four different gaming consoles? It’s all going to have to be disconnected (and, probably, untangled). Having a photo of which wires go where can save a lot of time and aggravation when you are setting up your system at your new home.

Protip: Snapping a pic of the make, model and serial number of each of your electronic components can be a huge help in case you have to track something down – or, if something goes missing, to confirm that component’s age and value.

Take pictures of large, especially valuable or just unusual items.

This isn’t to highlight damage, but it’s simply a good idea to have pictures of things, from furniture to expensive décor to items that we’d rather not have to try to describe. Because if something goes missing, a picture helps A LOT in finding it. (Use your inventory sheets, people!)

True Story: A week or so after delivering a long-distance shipment we’d taken into our warehouse, I got a call from the customer. “I’m missing a chair,” she told me.

This was not very helpful.

We had literally hundreds of chairs on the 30-foot-high racks in our warehouse. Knowing that this chair was upholstered with a flowery fabric was only slightly better, and as the woman lived up in the mountains two hours away. She wasn’t about to come down and help me find the right one. “Let me fax you a picture of the chair,” she said. (Yes, this was a few years ago.) And even though the picture was black and white and a little blurry, I recognized it right away, saving me hours of searching during the already-hectic summer season and saving the customer from days, if not weeks, of inconvenience and uncertainty. (Not to mention a two-hour drive to our warehouse.)

Take photos of the water, electricity, and gas meters.

Do this both at your old place before you leave, then at your new one before you move in. Why? To protect against being charged wrongly for utilities. Not that the utility companies are out to scam you, but it’s quite common for them to charge based on usage estimates (which saves time and money on meter readers). If their baseline reading is off, then so is your estimated usage. There may also be a lag – or an overlap! – between customer accounts. Bottom line is, there are plenty of ways you can end up being charged for another resident’s utility usage. Taking photos of your meters can help immensely if such a situation comes your way.

Take a video of your electronics in action.

On their inventory sheets, movers describe anything electric, electronic or mechanical using the acronym “MCU” – mechanical condition unknown. This means they don’t know if something works. Which also means you can’t prove something was rendered inoperable during your move. Without proof, it’ll be difficult to get reimbursed for the flat screen that has suddenly gone to plasma heaven.

To guard against this, videotape your TV, stereo, air hockey table, pinball machine, lava lamp, or whatever to show that these things were indeed working properly before the movers showed up. 

And ALWAYS timestamp your photos!

Imagine having pictures showing that you left your old place in perfect condition, but then having your old landlord claim that you took them before you did the damage he is trying to charge you for. Or owning a picture of the damage the movers did to your new place, only to have them say “No, that was like that before we showed up.”

How do you answer that?

There are a few ways.

  • Set your camera so the time and date show up on your photos.
  • Email your photos to yourself as soon as you take them.
  • Make sure your time and date is correct on your phone’s camera roll.
  • Even print out the photos you take and snail-mail them to yourself.

Protip: It may be easy for someone to claim that you simply changed the time/date setting on your camera before you snapped those incriminatory photos. So keep them on your memory card, sandwiched in between other pictures you took along the moving process – or even in between photos from before and after the process – to prove your timeline if need be. Most people are reasonable.

Are we being too cautious?

After all, the majority of moves – and the vast majority of HireAHelper moves – are completed without a hitch. But remember: accidents happen. Taking pictures can save you a ton of time and aggravation – not to mention a bit of cash – if something does go wrong.

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