Politics & Money

Homeowners say they feel stuck, can’t reach other financial goals

Income remains stagnant and can't keep up with the rising cost of homes

Rising housing costs and worsening income-to-mortgage ratios mean that more homeowners are house-rich, but cash-poor, limiting their ability to reach other financial goals.

In a new survey from homeownership investment startup Hometap, nearly 75% of the respondents said they feel house-rich, but cash-poor at least some of the time.

The survey asked 675 U.S. homeowners for their views on their economic status and security.

According to the report, a number of homeowners say they feel burdened by uncertainty of future income and home maintenance costs.

The report shows that 19.5% of homeowners said they feel house-rich, cash-poor most of or all of the time, while 73% said they feel house-rich, cash-poor at least some of the time.

“We knew there were pockets of homeowners who felt house rich, cash poor – we see that every day in our work – but were surprised to find that one in five feel that way so often,” says Jeffrey Glass, CEO of Hometap.

“Mortgage rates are at historic lows, which is encouraging more people to buy, but despite 45 million homeowners with excess equity, we’re seeing really conservative behavior – perhaps a lasting effect of the 2008 financial crisis,” Glass added. “Unless wages start to rise relative to home values, we’ll see more homeowners falling into the house rich, cash poor category.”

To that point, 66% of the respondents said that housing costs are rising quicker than incomes.

The main source of stress for homeowners is the uncertainty of future income, 82% to be exact.

The younger generation of homeowners, Millennials, say they also have a fear of a shrinking or idle income in correlation to the price of owning a home.

Among Millennial homeowners, 60% agree or strongly agree that housing costs make it difficult to achieve their financial goals, while 19% say that 50% to 100% of their monthly income goes towards their mortgage payment.

Meanwhile, 36% of Millennials are also paying off their student loans, which makes 15% stressed about whether or not they can help their child buy a home in the future.

“This may be surprising to some, since Gen X homeowners would presumably have children getting ready for college and/or buying their first home,” says Glass. “But because many Millennials are saddled with more student debt than previous generations, I believe they are highly motivated to help their children graduate college with little or no debt to avoid many of the financial stresses that they’ve endured.”

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