More than half of California households have heavy mortgage payments, and 30% of tenants pay half of their income in rent

According to a recent report from the nonprofit media outlet Cal Matters, more than half of households in California are facing housing affordability challenges. This report cites fresh research from Harvard University, which reveals that in 2022, over 50% of households in the state were cost-burdened. Nearly one-third of Californians are grappling with severe rental burdens, meaning they spend more than half of their income on rent.

The term “cost-burdened” refers to households that allocate more than 30% of their income towards mortgage payments, a standard widely used to assess the affordability of both purchasing and renting homes. This metric is also employed by the U.S. Department of Housing and Urban Development.

Several factors contribute to this issue in California, including rising mortgage rates, a shortage of available housing, high construction costs, and expensive land. A 2022 statistic revealed that the median home price in California is 2.5 times higher than the national median.

Furthermore, a report by NBC News indicates that nearly 30% of the middle class in the U.S. is cost-burdened when it comes to homeownership, a figure that has doubled over the past decade. This statistic shows that in 2022, almost 30% of middle-class households spent more than 30% of their income on monthly mortgage payments, a dramatic increase compared to 2013.

Experts warn that as the percentage of income spent on mortgage payments increases, families will have less available for essentials like food and emergency savings. Domonic Purviance, a housing market expert from the Atlanta Federal Reserve, commented, “In the past, people earned middle-class wages and could buy homes at the median price, but that’s no longer the case.”

In a report by NBC, Indiana couple Haley and Ben Williams purchased a $265,000 home in Elkhart in December 2023 with an interest rate of 8.125%. Their monthly obligations include $176 towards the principal plus over $2,000 for interest, taxes, and insurance. Despite the financial strain, Ben believes the purchase was worthwhile. “We know we bought a cost-burdened home,” he stated, but he views it as “a necessary sacrifice” as they plan to expand their family.