A large majority of Americans fear they will not be able to pay their housing costs next year. According to a recent survey by The Federal Home Loan Mortgage Corporation (Freddie Mac) housing costs increased by at least 30% for 6% of respondents.
The Freddie Mac survey revealed that 62% of Americans are somewhat or very concerned that they will not be able to pay their housing costs in the coming year. In addition, 69% fear rising housing costs in general, while 61% fear not being able to pay their essential expenses.
In the midst of high inflation figures and other unstable economic conditions, the Americans may be right by fearing rising housing costs for the coming year. According to The National Association of Realtors the affordability index housing prices in May reached its lowest point since 2006 falling to 102.5. In addition, average mortgage payments increased in the first five months of the year, rising from $1,297 in January to $1,842 in May.
3 out of 5 households struggle to pay their bills
When respondents were asked about their general economic situation, 41% said they were living from day to day, with just enough money to cover their main expenses. Even 20% said they do not have enough money for food and housing until the next payday. Only two out of 5 families are able to save something for the following month.
In the case of renting, 57% of tenants have suffered a price increase in their housing payments. He says it is very likely that they will not be able to pay it at the end of the month, which also causes 50% of the tenants to change their housing plans. They are now less likely to buy or decide to invest in a property.
Inflation as a determining factor
The economy contracted for the second consecutive quarter, which is an indicator of recession. However, the Joe Biden Administration consistently avoids using that traditional benchmark and instead uses more complicated criteria to lessen the political impact of the economic downturn. Home prices are a clear example of the economic instability in the United States. According to the FHFA (Federal Housing Finance Agency), in 2021 home prices rose almost 30% compared to the same period last year. This is the largest increase in the history of that agency's Home Price Index.