Analysis: For US renters, the chance of owning a home is going from bad to worse | CNN Business (2024)

Analysis: For US renters, the chance of owning a home is going from bad to worse | CNN Business (1)

New York City renters are faring particularly badly with rising rents because wage growth isn't compensating as well as in other parts of the country.

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign upright here. You can listen to an audio version of the newsletter by clicking the same link.

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The American dream of homeownership is looking more like a nightmare.

With inflation heating up again, the Federal Reserve is in no position to consider lowering interest rates at its upcoming meetings. That’s helped push the average fixed rate on 30-year mortgages above 7.2% after five straight weeks of increases.

Consumers aren’t expecting mortgage rates to come down any time soon. Over the next year, they anticipate that mortgage rates will rise to nearly 9%. Over the next three years, they expect rates that are close to 10%. That’s according to a New York Fed survey gauging consumers’ expectations of the housing market, released Monday.

On top of that, households are bracing for a resurgence in home prices over the next year after they had started to ease back last year.

But here’s the catch: Renting is also far from a bargain these days. Consumers are gearing up for even bigger increases compared to the expected rise in mortgage rates over the next year, the New York Fed survey found.

The issue of rent affordability is particularly pronounced in New York City, where housing costs have always been notoriously high compared to other parts of the country, absent a brief respite during the pandemic.

But what’s making the burden weigh even heavier is rents in the city grew seven times faster than wages last year, according to an analysis Zillow published Tuesday. That’s the biggest gap across 50 of the nation’s largest metro areas. Nationally, however, Americans’ wages increased at a faster pace than their rents last year.

The Fed’s role:The strong jobs market the Fed has sought to preserve while reining in inflation is working against New York City renters, Kenny Lee, a senior economist at Zillow-owned StreetEasy, said in a statement on Tuesday. That’s because new home construction in the city is especially struggling to keep up with the demand coming from the availability of jobs.

Would the situation be any different had the Fed been quicker to raise interest rates to fend off rising inflation back in 2022 when it hit a multi-decade high?

“It’s possible that inflation would have gotten back to target quicker if the Fed had hiked sooner,” Aditya Bhave, senior US economist at Bank of America, told CNN. If that happened, the central bank may not have needed to keep rates at the current high levels for so long.

That could have helped prevent mortgage rates from rising as high as they are now because, as Minneapolis Fed President Neel Kashkari said in a Bloomberg TV interview Tuesday, housing is “traditionally the most interest-rate-sensitive sector of the economy.”

However, Bhave said “hindsight is 20/20 and a lot of the inflation was caused by supply disruptions that the Fed couldn’t have prevented.”

The other side of the equation is that had the Fed not kept interest rates at near-zero levels for two years, many current homeowners who locked in low rates wouldn’t have been able to afford to own a home.

One of the dangers now is that the many Americans delaying plans to buy a home may not “get to participate in home value appreciation, which could affect the distribution of wealth in the long run,” Bhave said.

Slaughterhouse cleaning company fined $649,000 for employing child workers

A janitorial company has been fined $649,000 after an investigation found it hired minors for dangerous jobs cleaning slaughterhouses, the United StatesDepartment of Labor said Monday.

Fayette Janitorial Service had employed at least 24 children, including those as young as 13, according to the DOL investigation. The minors had been working overnight shifts at two separate slaughter facilities, according to the DOL.

Federal labor law bans children from certain jobs in slaughtering and meat packaging plants, including using or cleaning machinery, due to the hazardous conditions.

This isn’t the first instance of recent child labor violations in the meatpacking industry.

Children were found working at Seaboard Triumph Foods Plant in Sioux City, Iowa, and at a Perdue Farms poultry processing facility in Accomac, Virginia, according to the DOL. “Minors were used to clean dangerous kill floor equipment such as head splitters, jaw pullers, meat bandsaws, and neck clippers,” the Labor Department said ina February news releasedescribing the findings of its investigation.

Perdue “terminated our contract with Fayette Janitorial Services prior to this court filing,” a company spokesperson told CNN in a February statement, adding, “underage labor has no place in our business or our industry,” the statement continued.

Seaboard, a pork processor, told CNN in a statement that it “immediately terminated all contracts with Fayette,” upon learning of the Labor Department’s allegations. “Such conduct, if true, is in violation of our company’s policies and procedures and in violation of the strict commitments made by Fayette in their contract,” according to the statement.

“Our company will continue to take all appropriate follow-up measures to protect workers and ensure accountability for compliance of its contractors with labor and employment laws,” Seaboard said.

Instances of illegal child laborhave been growing in recent years, and other contractors have been fined over employing minors. Last year,Packers Sanitation Services paid $1.5 millionin civil penalties for employing minors in hazardous occupations and having them working overnight shifts, according to a DOL investigation.

Read more here.

TikTok sues to block prospective US app ban

TikTok sued Tuesday to block a US law that could force a nationwide ban of the popular app, following through on legal threats the company issued after President Joe Bidensigned the legislationlast month, reports CNN’s Brian Fung.

The court challenge sets up a historic legal battle, one that will determine whether US security concerns about TikTok’s links to China can trump the First Amendment rights of TikTok’s 170 million US users.

The stakes of the case are existential for TikTok. If it loses, TikTok could be banned from US app stores unless its Chinese parent company, ByteDance, sells the app to a non-Chinese entity by mid-January 2025.

In itspetition filed Tuesdayat the US Court of Appeals for the District of Columbia Circuit, TikTok and Bytedance allege the law is unconstitutional because it stifles Americans’ speech and prevents them from accessing lawful information.

The lawsuit followsyears of US allegationsthat TikTok’s ties to China could potentially expose Americans’ personal information to the Chinese government.

Read more here.

Analysis: For US renters, the chance of owning a home is going from bad to worse | CNN Business (2024)


Analysis: For US renters, the chance of owning a home is going from bad to worse | CNN Business? ›

For US renters, the chance of owning a home is going from bad to worse. New York City renters are faring particularly badly with rising rents because wage growth isn't compensating as well as in other parts of the country. A version of this story first appeared in CNN Business

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' Before the Bell newsletter.

What percentage of Americans own their home vs rent? ›

The national homeownership rate is 66%, which means that 66% of households own their home while 34% rent. This rate has held steady over the past year.

What percentage of people in the US rent? ›

Key statistics

Renters account for approximately 34% of the U.S. population, with 44 million housing units in the U.S. currently being rented. In the U.S. 17.2 million Millennials rent compared to 9.1 million baby boomers.

How many renter households are there in the US? ›

Nearly 44 million housing units were rented, comprising 34% of the total U.S. households. Per U.S. Census data, the average household size is 2.6 people. Thus, the number of renters was 114.4 million, or 35% of the U.S. population in 2021.

Do 77% of people in the US prefer to rent instead of buying a home? ›

77% of the people in the US prefer to rent instead of buying a home. The average gross rent was $1,164 in 2019. Rent prices nationwide increased by almost 50% from 2007 to 2017. 127 working hours is the weekly requirement for minimum wage earners to afford the average apartment.

What percent of US homes are owned by landlords? ›

Of the 132 million occupied housing units:

66% (87 million) are occupied by owners (single-family houses, condos, co-ops, townhouses) 34% (45 million) are owned by landlords and occupied by renters.

How much does the average person pay for rent in the US? ›

The average national rent price in the United States is $1,372, according to August 2023 rental market data from Apartment List.

What state has the highest percentage of renters? ›

Renters make up a much larger share of households in California (44%) than in the rest of the US (35%)—or in any state other than New York (46%), according to the US Census. This pattern predates the current surge in housing prices and has proved remarkably consistent over the last six decades.

What is the average rent in the US right now? ›

What is the average rent in the United States? The average rent in the United States is $1,515/month. This is 0.6% higher than this time last year.

Who owns the most rental properties? ›

The largest owner of apartments in the United States was Greystar, an international developer and manager headquartered in Charleston, SC. In 2024, Greystar owned nearly 109,000 units.

How many properties do most landlords own? ›

Half of All Landlords Manage Their Own Properties

The remaining 11% consists of landlords that manage, but don't own their properties. On average, landlords have three properties to their name.

Where are the most renters in the US? ›

California was the state with the highest share of renter households in the United States in 2022. About 30 percent of the households lived in rental accommodation in that year.

Do most Americans rent or buy homes? ›

Statistics & Studies on the Buy vs.

As of 2022, 84.6 million out of a total 129.9 million households own their homes. 45.2 million households rent their homes. 2.7% of occupied housing units are second homes. 10.4% of all housing units are vacant, down 2.88% from the previous year.

What percentage of Americans don't own property? ›

64% of Americans own real estate. 35% of the American population does not own their own homes.

What percent of Americans live in houses vs. apartments? ›

While 80 percent of the population would prefer to live in a single-family home, seven in ten Americans (70 percent) actually do. Apartment and condo living is only preferred by 8 percent of the population, yet two in 10 Americans (17 percent) live in an apartment or condo.

What percentage of Americans own a home over time? ›

Since 1960 the homeownership rate has remained in the 61- to 65-percent range. After slow growth from 1960 to 1980, the rate fell to 63.9 percent in 1990.

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