How Americans view the economy depends on whether they rent or own

Americans' perceptions of the economy vary significantly between homeowners and renters. Homeowners have benefited from lower mortgage rates during the pandemic, enhancing their financial stability and spending power. In contrast, renters face increased financial strain with rising rents and a higher likelihood of falling behind on payments, exacerbating economic disparities.

The divide influences the Federal Reserve's inflation control efforts, as homeowners' spending continues to fuel consumer prices. Homeowners also enjoy benefits like increased home equity and potential stock market gains, while renters struggle with basic expenses, highlighting a growing economic inequality based on housing status.

Rising rents since the start of the pandemic have significantly impacted the financial stability of renters. According to the data, rents have increased by more than 20%, with renters paying about $370 more each month on average. This has made the housing market difficult and almost unbearable for many renters.

Nearly 1 in 5 renters (19%) reported being behind on their rent at some point in the past year, a Federal Reserve report found, which is an increase from 17% in 2022. Renters were also more likely to report not paying all their bills in the previous month compared to homeowners, even when controlling for income.

The increased rent costs have forced many renters to tap into their savings, borrow from family and friends, and cut back on spending, including essentials such as food and healthcare. Despite these efforts, many renters have been unable to pay their rent in full or in part during the pandemic, risking eviction and housing instability.

The financial hardship has not been evenly distributed, with people of color, lower-income households, and younger people being particularly affected. The loss of income has been the primary source of financial hardship, but costs have also increased for some renters during the pandemic, including utilities and childcare.

In summary, the rising rents since the start of the pandemic have significantly strained the financial stability of renters, leading to increased debt, reduced savings, and a higher risk of housing instability.