Around 20% of US homeowners admitted feeling house rich, cash poor most of the time
One in five homeowners in the US felt that the rising costs of homes across the country and worsening income-to-mortgage ratios were holding them back from reaching their financial goals.
Roughly 19.5% of homeowners tagged themselves as “house rich, cash poor” most or all of the time, while 73% admitted they feel that way at least some of the time, according to the findings of the Hometap Homeownership Study.
Many of the 675 respondents were pessimistic about the affordability issue improving anytime soon and were struggling to find solutions. Overall, 66% of homeowners thought that housing costs are increasing faster than income, and 77% anticipated that the gap would get worse.
“We knew there were pockets of homeowners who felt house rich, cash poor — we see that every day in our work — but were surprised to find that one in five feel[s] that way so often,” said Hometap Chief Executive Officer Jeffrey Glass. “Mortgage rates are at historic lows, which is encouraging more people to buy, but despite 45 million homeowners with excess equity, we’re seeing really conservative behavior — perhaps a lasting effect of the 2008 financial crisis. Unless wages start to rise relative to home values, we’ll see more homeowners falling into the house rich, cash poor category.”
The report also revealed that the main stressors for 82% of homeowners were the uncertainty of future income and anticipated costs of home maintenance and repairs (81%).
Meanwhile, younger homeowners were more focused on helping their children or future children steer away from similar barriers. Forty-two percent of millennial homeowners felt pressure about saving for their children’s college costs, while 15% said they would help their children buy a home someday.
About 19% of millennial homeowners said that their mortgage payments eat up 50% or more of their monthly income. Around 36% of millennial owners, on the other hand, were still paying off student debt. Overall, 60% agreed that housing costs make it harder for them to achieve their financial goals.
“This may be surprising to some since Gen-X homeowners would presumably have children getting ready for college and/or buying their first home,” Glass said. “But because many millennials are saddled with more student debt than previous generations, I believe they are highly motivated to help their children graduate college with little or no debt to avoid many of the financial stresses that they’ve endured.”
Fifty-seven percent of survey respondents said they can’t find any way to alleviate their situation. And even though home values tend to grow steadily across the US, 73% don’t want to take on more debt like home equity loans. One in eight (12%) believed they would not be able to get a loan or sell a house.
