The housing cost burden hits hardest not just on first-timers who are just starting out but also seniors who are aging in place.
That’s the finding of a new report by First American Financial Corporation Senior Economist Sam Williamson, who says the number of cost-burdened homeowners has grown rapidly in the years following the pandemic, with first-time homebuyers and elders being punished the most.
Overall, housing costs reached a new peak in 2023, with 16.9 million homeowners spending more than 30% of their income on housing — the highest level in over a decade. And nearly 60% of the increase in newly burdened homeowners since 2019 came from those spending over half their income on housing.
“Affordability challenges have grown more common and more severe,” says Williamson. And the jump, he notes, has been driven mainly by younger and older homeowners. Since 2019, 87% of the three million newly affected households have been in those age groups, highlighting growing pressure at both ends of the age spectrum.
“Since 2019, nearly nine in 10 newly cost-burdened homeowners have been either younger adults entering the market or seniors aging in place,” the economist says.
While elevated home prices and mortgage rates are making it harder for new buyers to enter the market, rising expenses for taxes, insurance, and maintenance are placing added pressure on long-time homeowners. Together, these pressures have sent the number of cost-burdened households soaring, jumping by three million between 2019 and 2023, a 22% leap.
But it’s not just that more homeowners are struggling with housing costs; the severity of that struggle is also growing, according to the First American report.
Nearly six out of every 10 newly cost-burdened owners since 2019 are severely so, spending more than half their income on housing. In 2023, 7.3 million homeowners fell into this category, a 33% increase from 2019 and the highest level since 2011. The overall share of severely cost-burdened households now make up nearly one in 10 homeowners.
Each age group faces its own set of challenges. But even though many seniors have paid off their mortgages, rising property taxes, insurance premiums, and utility bills are straining their fixed retirement incomes. Between 2019 and 2023, the number of cost-burdened homeowners aged 65 and older increased to 6.5 million, the highest level in more than a decade.
Today, more than one in four older homeowners spend over 30% of their incomes on housing, making it increasingly difficult for them to age in their own homes in their golden years, according to the report.
At the same time, younger homeowners are stretching their budgets to get their foot in the door amid unprecedented growth in home prices and elevated interest rates. Between 2019 and 2023, the number of cost-burdened homeowners under 35 increased by just over half a million, a 40% increase.
In addition to rising housing costs, these younger households often carry higher levels of non-mortgage debt such as student loans and credit card balances compared to previous generations — making it harder to absorb unexpected expenses or accumulate wealth.
In contrast, middle-aged homeowners have fared better than their younger and older counterparts. The number of cost-burdened households between 45 and 64 rose by 332,000 from 2019 to 2023, an 8% increase.
Many in this demographic are in their peak earning years, while also managing fewer financial obligations and often having already paid off their mortgages. These combined factors place them in a financial “sweet spot” that helps them stay ahead of growing housing expenses more easily than other age groups.
“This widening gap underscores a growing divide: while younger and older homeowners feel the squeeze, those in the middle are, for now, holding relatively steady.” Williamson comments.
