The housing paradox: How SaverLife members’ financial health is challenged by the costs of housing
Written by: Mathieu Despard
SaverLife members, and the millions of people living on low-to-moderate incomes (LMI) in this country, are making difficult choices when it comes to navigating the increasing costs of safe, reliable, and affordable housing. With rapidly increasing rental prices and utility bills — alongside high costs of living, child care expenses, and debt obligations — they’re often forced to prioritize what monthly expenditures will be sacrificed in order to pay for more pressing needs.
It’s no surprise then that our members are feeling the pinch when it comes to financial precarity in the housing market. The news cycle is filled with stories about unrealistically high rent, the decreasing availability of homes, and the impact of climate change on housing costs. Read on to learn more about the delicate balance our members face and what we are researching to offer more informed and actionable solutions that will help guard against this.
The cost of safe, reliable, affordable housing is wreaking havoc
Housing costs are expensive and put a strain on the LMI community’s financial stability. But these housing costs can also cause a ripple effect on other aspects of their financial health, including how they plan for the future and take steps toward longer-term goals.
Take SaverLife member Roshelle for example. After settling into a new rental with her three kids, what she thought was going to be an affordable and reliable housing situation proved otherwise. Even with her hard work and efforts to maintain a budget, she still found herself weighing out necessary expenses and prioritizing when and how she would pay them, including her rent. According to Roshelle, her decision making started to sound like, “Okay, well, I need my lights on, and I need money to buy my kids food. It might be a longer process for my landlord to say, ‘Okay, well, we're gonna start the eviction process.’ So we’ll wait on rent and deal with the problems when it comes to head.”
While Roshelle thankfully didn’t experience eviction, for every day that her rent was late, her account accrued a $5 fee, leading to a large debt on top of her monthly payments. The additional money owed on her housing increased Roshelle’s stress levels and left her feeling conflicted. She was glad to have a safe and reliable home for her family, but it became an impossible juggle.
No one should have to put ‘necessary’ expenses on the back burner. But because Roshelle couldn’t negotiate on the price of her home, she continued having to make difficult financial choices to keep everything in as best balance as she could.
The bigger picture on rent and homeownership
The basic reason that the housing cost burden is increasing is because there’s a severe housing shortage in the U.S. As we know from recent research, there just aren’t enough safe, reliable, and affordable housing options available for people living on low-to-moderate incomes. Plus, access to resources and services that could support them are limited. In fact, only 5.3 million people receive federal rental housing assistance per year, but more than 16 million people apply for it
When considering home pricing across the country, the realities facing SaverLife members get even more complicated:
In 2023, 653,104 people were unhoused: a 12% increase from 2022
Almost half (49%) of renters spend more than 30% of their income on housing
The median monthly rent for all housing types is $2,100
Homeowners are burdened with rising housing costs, especially if they already live on a low-to-moderate income
The reality is: housing has the LMI community stuck on their financial health journeys. It’s taking up an oversized portion of their incomes, despite their best efforts to keep it in check. More importantly, it’s pushing them toward unsafe, unstable, and inadequate housing, and with little to no safety nets in place to prevent this from happening.
Creating equitable access to housing
With the many interconnected realities housing poses to the LMI community, it’s critical that we, as leaders in the financial health space, work to build more access to resources and services that will greatly reduce the financial trade-offs they make between housing costs and other priorities.
Thanks to support from the Melville Charitable Trust, SaverLife recently launched The Housing Paradox: Exploring the relationship between housing stability, financial health and the enduring dream of homeownership. This project enables us to uncover how SaverLife members are accounting for housing in their financial health goals. It also empowers SaverLife to push the boundaries on what we know about the housing crisis.
Through our partnership, we will explore how SaverLife members:
Navigate unstable housing situations like temporary stays including “couch surfing”; unsafe conditions like faulty wiring or plumbing; and relocations due to rising rent, crowding, interpersonal conflicts, and/or other challenges.
Plan and make housing payments, and how this relates to their job security, as well as unexpected financial shocks, difficulties paying student loans, and other circumstances.
Seek out housing assistance programs, if at all
Think about homeownership and confront challenges associated with purchasing a home
In addition, we have secured support from the Deutsche Bank Americas Foundation to conduct a study to better understand the external drivers of housing insecurity and financial health among SaverLife members in the New York City metro area. While we know that over half of renters in New York experience a housing cost burden (spending 30% or more of their income on housing costs), it is not clear how housing costs may “crowd out” and compete with other living expenses such as childcare, transportation, and health care and whether renters make certain trade-offs, such as paying rent while delaying other financial requirements like filling a prescription.
While the solutions to the housing crisis are complex and involve things like land use regulations, interest rates, and the construction workforce, our hope is to produce insights that can help galvanize change: in public policies and for SaverLife members. This way, all people living on low-to-moderate incomes can afford housing, meet their other needs, and take steps toward lasting financial health and well-being. Stay tuned for member research insights coming soon. Sign up for our research newsletter now to never miss an update.
Mathieu Despard is the VP of Research and Policy at SaverLife. In this role, Mat leads work to develop actionable insights on the root causes of financial inequality. His goal is to affect meaningful change in the public policy and the private sectors and improve the lives of people and families living on low-to-moderate incomes: a commitment he’s pursued throughout his career as a professor, researcher, and published author.