Affording a home in the U.S. increasingly seems like an impossible dream
It is a desperate time for many Americans struggling to keep a roof over their heads. Just outside of Harrisburg, Pennsylvania, Erica Duvall often feels like keeping up with the rent on the one-bedroom apartment she shares with her 9-year-old daughter is an "impossible" task.
"I definitely make the most money that I've ever made…and it's still not enough to keep up," the single mom said. Duvall said her rent went up $100 when she renewed her lease in December, and she expects a similar hike this winter.
"When you're working as hard as some of us work and you still can't stay on top of it, it's really hard to not get to the point where it's like why…am I working so hard," she said.
Duvall, 29, is far from alone. According to Harvard University's Joint Center for Housing Studies, rent growth has slowed in recent months, but is still up 26% since early 2020. Recent data from the Census Bureau also shows that 21 million households — nearly half of all renters — were cost-burdened last year, meaning they spent more than a third of their income on rent.
Coupled with stubborn inflation on things like groceries and car insurance, many Americans are forced into making difficult choices between paying rent and paying the bills.
"It's hard to budget when [the price of] everything is constantly changing," Duvall said.
Rent around the U.S. varies widely, from pricey urban digs where jobs are more plentiful to low-cost rural areas where employment is harder to find. With new housing inventory coming on the market in the South, year-over-year, for example, rents have actually declined in metros like Austin, Jacksonville, and San Diego, according to August data from Redfin.
But with housing inventory for homebuyers remaining tight in the Northeast and Midwest, rents in some cities have increased by upwards of 10% since last year because of strong demand.
"The market's been absolutely nuts"
Buyers are making hard decisions, too. New parents and first-time homebuyers Eli and Amanda Enav thought they would outgrow their New York City rental and purchase a home in 2022. Tight market conditions had kept them on the sidelines for years.
"We were waiting for prices to come down or interest rates to come down. Neither of those things have happened," husband Eli said.
Home prices are up 29% since 2020, with the price of a typical home jumping from $331,807 to $429,324 this year, according to data from Realtor.com.
Meanwhile, like bags of chips and cartons of ice cream, homes are not immune from shrinkflation, resulting in buyers paying more for less. While homes have shrunk an average of 126 square feet since 2019, over that period their price has risen $123,655, according to a CBS News analysis of Realtor.com data.
In better news for house hunters, mortgage rates have dipped from highs around 8% last October and now hover in the 6% territory. Experts expect borrowing costs to continue trending down, as Federal Reserve officials are widely expected to cut its benchmark interest rate during their meeting on September 18.
With a new baby and a dog crowding their two-bedroom apartment, the Enav family made a tough -— and expensive — decision.
"We figured we have to move on with our lives and couldn't just wait for things to turn around in our favor," Eli said. "We made the decision [that] it's time to buy, even if it's at an inflated cost."
The married couple found a house in New Jersey, although with a bigger price tag than they had hoped.
"The market's been absolutely nuts," wife Amanda said. "It's going to be a bit more of a burden than we originally anticipated."
Massive housing shortage
Why has the housing market been so tight for so long? A key factor is historic shortage of homes for sale. According to data from Zillow, that shortfall grew from 4.3 million homes in 2021 to 4.5 million homes in 2022.
"We built fewer homes in the 2010s than in any decade going all the way back to the 1960s, and because we built so few homes, we really didn't build for the new families that would be forming," explained Redfin chief economist Daryl Fairweather. "Millennials are the largest generation, so we have all of this added demand for housing when we really just didn't plan for it."
"We didn't build enough, and that is why we have this 4 million-plus unit housing shortage," Fairweather added.
For many, that may mean lowering their expectations. According to a CBS News poll, 32% of voters 18-29 years old and half of 30-64 year olds feel they won't ever reach the American Dream, rooted in the deeply entrenched aspiration of having a place you can call your own. For voters under 30, 82% believe it's harder to buy a home now than in previous generations.
Fairweather said that over the long run the changing housing market will push people away from traditional single-family homes.
"That kind of a home, especially in close proximity to jobs, to the city, is not going to get more affordable," she explained. "Those homes are really going to become a thing of the past. And what we'll see is more smaller homes, more townhomes, more multiplexes, more condos, and those will start to become more accessible, more affordable."