In these areas, like the rest of the country, younger households and lower-earning households spend larger shares of their incomes on housing. Interestingly, while the San Francisco-Oakland-Hayward area has the nation’s highest housing costs, its residents also have higher incomes, making its housing cost burden lower than in areas such as Miami-Fort Lauderdale-West Palm Beach when you look at the national picture. It tied for highest owner cost burden at 22% with New York-Newark-Jersey City, Los Angeles-Long Beach-Anaheim, and California’s Riverside-San Bernardino-Ontario region. Out of the 15 most populous metropolitan areas, the Miami-Fort Lauderdale-West Palm Beach area topped the renter housing cost burden rate at 37%. That said, there are some areas where the housing cost burden was higher than average. The housing cost burdens for the largest metropolitan areas are comparable to the overall national rate: a median proportion of owner cost was 17.6%, and median proportion of gross rent was 30.6%. However, it turns out that housing costs in these areas were actually comparable to the national average. People living in big cities including New York, Los Angeles, or San Francisco might be concerned about the high housing costs. However, as of May 11, 2023, that same estimate shows the average interest rate to be at 6.35%. In fact, according to Freddie Mac, the average interest rate on 30-year mortgages peaked at 4.94% during this period. This data covers the period from 2017 to 2021, when interest rates were lower. It's worth noting that the costs of owning a home today may be higher than what's reflected in the data here. Instead, their costs included real estate taxes, insurance, utilities, or condo fees. About 39% of owners owned their homes outright and no longer have mortgage or interest payments. That share rose to 75% for lower-earning households where the householder was younger than 30. For instance, 64% of households that earned less than $50,000 annually spent more than 30% on housing costs. Younger and lower-earning households tend to spend a larger portion of their incomes on housing. Conversely, about a quarter of renters reported spending more than half of their income on housing between 20. For more affluent Americans, these thresholds might not be helpful, and some housing markets may make it difficult to stay within the limits.

However, these guidelines may not work for everyone. Mortgage lenders often require principal, interest, taxes, and insurance payments to be less than 28% of income. In 1969, an amendment to the Fair Housing Act capped public housing projects rent at 25% of a tenant’s income. This number is made up of 21% of owned households, and half of rented households.īoth the federal government and many mortgage lenders suggest that most households spend 30% or less of their income on housing. If you set aside 1,395 each month toward your emergency fund, you would accumulate 16,731 in a year.

Three months of expenses would suggest having a rainy-day fund of 16,731.

21% of owning households are spending 30% or more ofīetween 20, 31% of households spent 30% or more of their income on housing, according to the Census Bureau’s American Community Survey. The average American household spent 66,928 in 202 1, or 5,577 a month.

Gerneral household budget percentages