Rising Rent Prices Burden Middle-Class Households, With 40% Cost-Burdened Nationwide, Analysis Reveals

The burden of rising rental costs, once mainly a concern for lower-income households, has now extended its reach to the middle class. Nearly 40% of middle-class renter households find themselves struggling to make ends meet, as revealed by an analysis conducted by NBC News using data from the Census Bureau. This marks a significant increase of almost 20% since 2019, while the percentage of cost-burdened, low-income households saw a much more modest rise of only 2%.

Defining Cost-Burdened Households

A cost-burdened household is typically defined as one that allocates 30% or more of its pretax income towards rent and housing costs. This benchmark has long been recognized as a threshold for affordability, with both the Census Bureau and the Department of Housing and Urban Development adhering to this standard for decades.

The Financial Strain on Households

The implication of spending more than 30% of one's income on rent extends beyond mere financial discomfort. According to Peter Hepburn, associate director of the Eviction Lab at Princeton University, such a scenario makes it increasingly challenging for individuals to manage their overall expenses, rendering them vulnerable to various adverse situations.

The Evolving Landscape of Rental Burdens

While cost burdens have historically impacted lower-income renters, Hepburn observes a concerning trend wherein middle-class renters are now experiencing similar challenges. The tight housing market in recent years has exacerbated the situation, impacting not only renters but also potential homebuyers. This shift has been particularly evident over the past five to six years, as cost burdens have begun to encroach upon what was once considered the middle class.

Snapshot of Middle-Class Renter Households

Defining middle-class households typically encompasses those earning between 50% and 150% of the median income, which translates to an annual income range of $40,000 to $121,000. The Census Bureau survey data reveals that out of the 40 million renter households surveyed, middle-class households constitute 20.1 million, with approximately 7.8 million of them categorized as cost-burdened.

Personal Experiences of Financial Strain

One such individual navigating this financial tightrope is Daniel Evans, a 35-year-old audiovisual technician in Tennessee. Despite earning a middle-class income and consistently securing promotions, Evans finds himself relying on roommates to co-share the burden of rent. His journey from Memphis to Nashville in pursuit of better job opportunities has revealed a stark contrast in rental affordability, with median rents surging by 23.4% while median incomes have only increased by 5%.

Evans's struggle to find affordable housing culminated in a shift to shared living arrangements with a friend who also serves as his landlord. This arrangement not only alleviated his cost-burdened situation but also fostered a sense of camaraderie. However, this fortunate turn of events is not a universal experience for many renters grappling with financial constraints.