With housing expenses continuing to soar throughout America, there is growing concern among many consumers as the burden of these heightened costs takes a toll on their personal financial stability and broader economic outlook. While these expenses present unique challenges, particularly for renters, many Americans are also facing the effects of inflation and stagnant wages, according to a recent survey from Nationwide.
Nationwide’s survey revealed that 78% of respondents now rate the economy as poor or fair, showing a slight improvement of six percentage points from 2023, and 64% rate their personal financial situation as poor or fair. However, this modest progress in economic sentiment does not alleviate the widespread economic apprehension felt by many. According to a recent Prosper Insights & Analytics survey, found that only 38.6% of adults aged 18 and older expressed confidence in a robust economic future over the next six months.
According to Nationwide, consumers’ primary concerns include inflation – with a staggering 80% of respondents citing it as a significant worry, and wages not keeping pace with inflation (51%), exacerbating their personal financial strain. Additionally, half of the respondents (50%) identified high housing costs as a critical concern, underscoring the burden of rising rent and the difficult housing market.
Interestingly, these data stand in contrast to what some other economic indicators suggest, showing a more positive outlook. For instance, a Congressional Budget Office report found an increase in household purchasing power across all income levels since 2019. Additionally, data from the Bureau of Labor Statistics still indicates a steady job market with more job openings than unemployed workers.
The Nationwide survey also found some notable differences in the experiences between today’s renters and homeowners. Renters face more significant financial challenges and difficult decisions.
More than three in four (77%) renters describe their financial situation as poor or fair, compared to about half (53%) of homeowners. Furthermore, renters are relocating or downsizing at more than twice the rate of homeowners (20% vs. 8%), perhaps due to the increasing cost of rentals. Despite these challenges, renters feel more optimistic about the future, with 40% expecting their personal financial situation to improve during the next 6 months, compared to only 28% of homeowners.
Kathy Bostjancic, Nationwide’s Chief Economist, said, “The current economic environment continues to be challenging to understand for both economists and consumers alike. Though our indicators show reason for people to feel optimistic, renters and lower earners are continuing to feel particularly financially strained and we’re seeing this frustration demonstrated by their lower economic sentiment.”
According to Nationwide, 21% of respondents have withdrawn or are considering withdrawing money from their retirement savings to cover housing costs. Additionally, two in five (40%) homeowners have delayed necessary structural repairs to their homes, with 69% citing high costs as the primary reason.
These challenges are compounded by Americans’ expectations of continued high costs and lack of relief anytime soon. Two thirds of survey respondents reported that they expect housing costs to continue to rise over the next 12 months. Furthermore, even if the Fed cut rates, a majority (53%) said that it would not impact their likelihood of purchasing a home. According to a recent Prosper Insights & Analytics survey, similar findings show only 5.2% of Americans with a household income of $75,000 or more report that they plan to buy a house in the next six months
To help offset increased costs, the Nationwide survey found that more than half (57%) of consumers is delaying major purchases and 50% are cutting back on dining out; while 76% are reviewing or considering reviewing their insurance policies and 25% seek ways to save on their insurance premiums.
The good news is that even amid these challenges, some Americans are seeking ways to better manage their finances. More than one in four (26%) respondents are seeking professional advice from a financial professional today.
Despite the challenges posed by rising housing costs, inflation, and stagnant wages, we are seeing encouraging signs of resilience and proactive financial management from Americans. The willingness of consumers to adapt and plan for their financial futures is crucial to their long-term financial health.
