High housing costs hitting record highs, Harvard University report says

The high cost of housing is making it hard for many Americans to make ends meet, and monthly rents are rising faster than wages, according to a new housing report from Harvard University.

The Joint Centers for Housing Studies of Harvard University report was released in June.

The annual report says housing deals are hard to come by right now.

Daniel McCue, the senior researcher on the Harvard University Housing Report, says home prices are steep right now and there is not enough supply.

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"Middle and lower income renters are seeing a shortage. We've lost over 6 million low-rent units over the past 10 years," McCue said.

The lead author of the report said there are a lot of homeowners who can't afford to move right now even if they wanted to. 

Rachel Burkholder said she is looking for a new home in the Denver suburbs because she wants to find a bigger space to fit her family. Burkholder, who's a teacher, said she's been working an extra job to afford a new home and that inflation has made it hard to save for a new home.

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"It's been daunting because, like everything else, it's going up," Burkholder said. "I feel like everything that you purchase at the store now has gone up substantially, so learning how to budget better has been a challenge." 

The report cites that higher interest rates and rising property taxes are partially to blame for the high housing costs.

Daryl Fairweather, the chief economist at Redfin, said housing costs are up in almost every part of the country.

"First it was the south that was getting more expensive, we saw a boom and a bust in places like Austin, but even the midwest and the northeast are now seeing rapid price growth, in home prices and in rents," Fairweather said.

More Americans are living in homes that stretch their budgets thin, the study said.

One in 4 homeowners are spending more than the recommended "30 percent of their income" on housing costs such as utilities and mortgage payments. 

By comparison, paying rent to live in an apartment is even pricier. 

Almost half of all renters are spending more than the recommended 30 percent on rental costs. 

Experts add that rental costs don't seem to be going down anytime soon. So, if you can afford it, now might be the time to buy. 

 "Going into this, knowing that there's going to be some sacrifices we are going to make as a family. But also knowing that there's some wiggle room especially looking now when there's not as much competition," Burkholder said.

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Economists predict that mortgage rates will remain elevated for most of 2024 and that they will only begin to fall once the Federal Reserve starts cutting rates.