Board of Governors of the Federal Reserve System

Housing

Housing represents the largest expense for most families, and consequently, housing decisions have the potential to substantially affect economic outcomes. The majority of adults owned their homes in 2023, though homeownership was less common among lower–income adults. Those who rent their homes, rather than own, most often said they did so because of financial constraints. That said, many renters noted that renting was more convenient than owning.

Despite the risk of financial losses, some homeowners do not have homeowners insurance. Those with low incomes and those in regions with more people affected by natural disasters were more likely to say that they did not have homeowners insurance.

Homeowners

Sixty-four percent of adults owned their homes. Yet, the likelihood of owning varied substantially by income. Thirty-six percent of adults with less than $50,000 of income own their home, compared with 87 percent of adults with a family income of $100,000 or more. The income gap in homeownership is even greater among adults under age 60, as older adults frequently have higher wealth and may be less reliant on income for homeownership.³⁹ Among adults under age 60, just over one-fourth of adults with less than $50,000 of income own, well below the 84 percent homeownership rate seen for similarly aged adults with over $100,000 of income.

Gaps in homeownership rates were also apparent by other demographic characteristics. Black and Hispanic households were less likely to own than White and Asian households. Adults with a disability were also less likely to own (table 27).

Table 27. Homeownership rate (by demographic characteristics)

About two-thirds of adults who owned their home had a mortgage in 2023. The median monthly mortgage payment was $1,500.⁴⁰ Mortgage payment amounts differed by census regions and the years people moved into their home (table 28). Likely reflecting differences in home prices across the country, mortgage payments were higher in the Northeast and West, compared with the Midwest and South. Consistent with increases in mortgage rates that began in early 2022 that increased housing payments for new purchases, mortgage payments were also larger among those who moved in 2022 or 2023 relative to those who moved into their homes in earlier years.⁴¹

Table 28. Median monthly mortgage payment (by census region and most recent move)

Renters

Just above one-fourth of adults (27 percent) rented their home in 2023.⁴² Black and Hispanic adults and adults with a disability were disproportionately likely to rent. Additionally, lower-income adults as well as those who live in low- and moderate-income neighborhoods or who live in metro areas were more likely to rent (table 29).

Table 29. Share who rent (by demographic characteristics)

Median reported rent was up about 10 percent in 2023 relative to that seen in the previous year. In 2023, the median rent payment reported in the survey was $1,100. This compares with a median reported rent of $1,000 in the 2022 survey.

Like homeowners with a mortgage, renters in the Northeast and West had higher monthly rent payments compared with the those in the Midwest and South, as measured by the median rental payment in the region (table 30). However, the median monthly rental payments were smaller than monthly mortgage payments made by homeowners. Renters who moved in 2023 or 2022 also had higher rent payments compared with those who did not move in the prior two years.⁴³

Table 30. Median monthly rent payment (by census region and most recent move)

Renter Experiences

Renters cited multiple reasons for renting their homes. Similar to reasons reported in 2022, financial constraints led many adults to rent their home instead of owning in 2023. The most cited reason for renting was an inability to afford a down payment—in 2023, nearly two-thirds of renters cited this as a reason. Four in 10 renters indicated that they rent because they cannot qualify for a home mortgage, and 48 percent said they rent because they cannot afford the monthly mortgage payment (table 31).

Table 31. Reasons for renting (by year)

Although many renters noted financial constraints, these were not the only reasons for renting. More than one-third of renters preferred to rent than to own. The majority of renters (57 percent) said that renting is more convenient, and 44 percent rent their homes because they perceive owning as a larger financial risk. Forty-two percent of renters found it cheaper to rent than own.

There was a slight uptick in the share of renters who faced challenges paying their rent in 2023. Nineteen percent of renters reported that they had been behind on their rent at some point in the past year, compared with 17 percent who said they were behind in 2022. Black and Hispanic renters were more likely to be behind on rent payments than White and Asian renters. In 2023, Black renters were more than twice as likely—and Hispanic renters were almost twice as likely—as White renters to report being behind on rent at some point in the past year.

The cost of housing can cause some people to move. However, relatively few renters said they moved primarily because of an increase in rent. Four percent of renters (24 percent of current renters who moved in 2023) said the main reason they moved was rent increased at their previous home.

Other renters move because of eviction or threat of eviction. Two percent of renters moved in the prior year because of eviction or threat of eviction. This represents 15 percent of renters who moved during 2023.

Neighborhood Satisfaction

The quality of people's neighborhoods, in addition to their housing, can affect well-being and opportunities for the future. Neighborhood quality and characteristics can also influence the decision of where to live.

Overall, 76 percent of adults were either somewhat or very satisfied with the overall quality of their neighborhood (table 32). Most adults were also satisfied with the level of crime risk, quality of local schools, and the risk from natural disasters. However, only 37 percent were satisfied with the cost of housing in their neighborhood.

Table 32. Satisfied with local neighborhood characteristics

People's satisfaction with their neighborhoods differed by homeownership status. Adults who rent were less likely to be satisfied with their neighborhood overall, as well as less likely to be satisfied with the neighborhood characteristics (figure 27). For example, less than one in three renters were satisfied with the cost of housing in their neighborhood, compared with 42 percent of homeowners.

Natural Disaster Risks

People may face a variety of financial challenges in the event of natural disasters or severe weather events. Property damage or loss is one of the largest financial risks, particularly for homeowners without homeowners insurance. Natural disasters and extreme weather can cause other disruptions, such as missing work or higher bills for heating or cooling homes.

Nearly 2 in 10 adults reported being financially affected by natural disasters or severe weather events (such as flooding, hurricanes, wildfires, or extreme temperatures) during the prior 12 months. Most of these effects were modest, as 12 percent of adults said that they were slightly affected by natural disasters. Yet 5 percent of adults said that they were moderately affected, and 2 percent said that they were substantially affected financially by natural disasters. When asked about how they were affected, the most common way was property damage, with nearly 1 in 10 adults affected (figure 28).

The effects of natural disasters were not experienced uniformly across demographic groups or geography. Adults with lower incomes and nonwhite adults were more likely to be financially affected by a natural disaster. Nearly one-fourth of adults living in the South were financially affected by a natural disaster, compared with 13 percent in the Northeast (table 33). Additionally, 10 percent of adults in the South were moderately or severely affected by natural disasters, exceeding that seen in other regions.

Table 33. Financially affected by natural disaster or severe weather event (by demographic characteristics)

Some adults undertook mitigation activities, such as improving their property or purchasing additional insurance, to reduce their financial risks from natural disasters. Making improvements to one's property was the most common mitigation activity, with 18 percent of adults doing so, followed by investigating other places to live (13 percent) and purchasing additional insurance (5 percent). Those who had been financially affected by a natural disaster were more likely to undertake each of these mitigation activities: one-third made improvements to their property to reduce risk, and one-quarter investigated other places to live.

While some people purchased additional insurance to help mitigate financial risk from natural disasters, others had no homeowners insurance. At least 4 percent of homeowners (or 13 percent of owners who own their home free and clear) did not have homeowners insurance.⁴⁴

Homeowners who appear to have a higher risk of being financially affected by a natural disaster were also less likely to have homeowners insurance. Homeowners with lower income, those living in the South, and homeowners who had already been financially affected by a natural disaster were all less likely to have homeowners insurance. For example, more than 2 in 10 homeowners in the South with an income less than $50,000 did not have homeowners insurance (figure 29). If limiting the former group to only those homeowners who own their home free and clear, the share of low- and moderate-income homeowners in the South without insurance is nearly 4 in 10.

 

References

 39. Older adults, even those with lower incomes, are much more likely to own their homes free and clear. For example, among adults with incomes less than $50,000, nearly 40 percent of those age 60 or older own their home free and clear, compared with 6 percent of those under age 60. Return to text

 40. Owners with a mortgage were asked for the total mortgage payment that they send to their bank, which will typically include escrow payments for taxes and homeowners insurance but will not include utilities. Return to text

 41. For details on average mortgage rates over time, see Freddie Mac, "Current Mortgage Rate Data Since 1971," https://www.freddiemac.com/pmms. Return to text

 42. The share who own plus the share who rent does not sum to 100 percent because some people live rent free in a house that neither they nor their spouse or partner own. Return to text

 43. In addition to reflecting changes in rent prices over time for new leases, the differences in rent prices for those who moved recently may reflect differences in who decides to move each year. Return to text

 44. Homeowners with a mortgage generally are required to have homeowners insurance. Therefore, only those who own their home free and clear were asked if they have homeowners insurance. A small share of homeowners with a mortgage may not have insurance, although these individuals may have lender-placed insurance. Return to text