More Americans are becoming “house poor” due to high housing costs

More Americans are becoming “house poor” due to high housing costs

For Cody Hanson, a co-owner of Skull and Dagger Tattoos in Littleton, Colorado, higher housing costs are something he’s all too familiar with.

“The dollar doesn’t go as far as it once did,” Hanson said. “Now you have to pay like a mortgage just for a simple apartment.”

Experts said people shouldn’t spend more than 30 percent of their income on housing, and that includes paying rent or a mortgage, as well as utilities.

But a new report released Thursday by Harvard University’s Joint Centers for Housing Studies says nearly 1 in 4 housing households fall into that category.

Related story: Prospective homebuyers could face steep mortgages as interest rates stay flat

“I feel like it’s about 30 percent, if not more,” Hanson said. “One of my last apartments went for $3,000 a month. I just couldn’t afford it, even if we end up with a simple one bedroom apartment, it’s still $2,300. I think it’s crazy.”

It’s even worse for renters. According to the study, nearly half are what are often called “house poor.” At 22.4 million households, this is the highest number on record.

For homeowners, the report cites the costs of buying and borrowing for a new home in a tight market, rising insurance premiums and rising property taxes.

For renters, the Harvard study said monthly rents have risen faster than wages for years, while the stock of the most affordable units under $1,000 a month has shrunk by 6 million since 2012.

The report says a combination of high interest rates and high home prices has resulted in an average home mortgage payment of about $2,200 a month.

There was some positive news in the report if you already own a home you want to stay in: Your home equity has increased by more than $100,000 on average over the past four years.