Federal Reserve Study Shows Higher Housing Payments for New Renters and Buyers, Barriers to Homeownership and Homeowners Insurance Affordability Challenges

The Federal Reserve Board issued its Economic Well-Being of U.S. Households in 2023 report. The study summarizes findings from the Survey of Household Economics and Decisionmaking (SHED), which analyzes the financial circumstances of U.S. households.

Several key housing-related findings include:

1. New homeowners’ monthly payments are 50% higher than those of households who bought before 2022. The median mortgage payment for households that moved in during 2022-23 was $2,100, 50% higher than that of those who moved before 2022 (median mortgage: $1,400). The greatest difference was in the West, where new homeowners had median payments of $2800 compared to $1700 for homeowners who bought before 2022 (65% higher).
2. New renters’ monthly payments are 18% higher than those of households that moved in before 2022. The median rent for households that moved in during 2022-23 was $1,231, 18% higher than that of those who moved before 2022 (median rent: $1,045). The greatest difference was in the Northeast, where new renters had a median payment of $1600 compared to $1200 for renters who moved before 2022 (33% higher).
3. Most renters would prefer to own a home; 30% are trying to buy. Most of the top reasons holding renters from homeownership are financial: 65% can’t afford the down payment, 48% can’t afford the monthly payment, 42% say it is cheaper to rent, and 40% can’t qualify for a home mortgage. One in ten renters indicated they were trying to buy a home.
4. Homeowners are more satisfied with their local neighborhood characteristics: Compared to renters, homeowners are typically more satisfied with their surrounding communities. Overall, 83% of homeowners are satisfied with neighborhood characteristics, including the quality of local schools, crime risk, and cost of housing, compared to 64% of renters.
5. Lower-income households are forgoing homeowners insurance, especially in the South: 22% of homeowners in the South earning less than $50,000 have no homeowners insurance, compared to 14% in the West, 11% in the Midwest, and 8% in the Northeast.