With rent of $1,160 a month in Asbury Park taking up most of her family’s income, Susan Aquino began to search for a new apartment that would give her some breathing room.
The hunt didn’t last very long.
“We were looking for two bedrooms, and they were … $1,500 to $1,700 between October and March,” said Aquino, 43.
Aquino is part of a troublesome story playing out across New Jersey and the U.S. in the 10 years since the housing bubble peaked and then burst in a ruinous crash: As real estate has climbed back, homeowners are thriving while renters are struggling.
For many longtime owners, times are good. They’re enjoying the benefits of growing equity and reduced mortgage payments from ultra-low interest rates.
But for America’s growing class of renters, surging costs, stagnant pay and rising home values have made it next to impossible to save enough to buy.
The possible consequences are bleak for a state already grappling with economic inequality: Whatever wealth most Americans possess mainly comes from home equity. An enlarged renter class means fewer Americans can build that same wealth and financial security.
Nearly two-thirds of adults still own homes. And some who rent do so by choice. Yet ownership has become a more distant dream for the many Americans who still regard it as a route to prosperity and pride. The problem has become especially severe in areas that offer the best job prospects as well as those that have been battered by foreclosures.
“It doesn’t paint a pretty picture,” said Svenja Gudell, chief economist at Zillow, the online real estate database company. “You’re really blocking out a group of buyers from owning a home. They’re truly living paycheck to paycheck, and that does not put them into a good position to buy.”
New Jersey’s homeownership rate has dropped more precipitously – from a peak of 71.3 percent in the first quarter of 2005 to 60.9 percent 11 years later, according to data from Patrick J. O’Keefe, director of economic research for CohnReznick, an accounting firm.
That demand has driven up rents, which in turn have prevented or delayed people from buying first homes.
The government says if you spend more than 30 percent of your pretax pay on housing, you are “cost-burdened.” The total number of renters in that category has jumped more than 30 percent in the past decade, to 21.2 million. Half of all renters are now considered cost-burdened, compared with just 24 percent in 1960.
In the New York-Newark-Jersey City metropolitan statistical area, which includes Monmouth and Ocean counties, the trend is the same. Some 51.6 percent of renters are considered cost-burdened, up from 48.5 percent when the Great Recession technically ended in 2009, the AP data shows.
By comparison, 40.1 percent of homeowners are considered cost-burdened, down from 41.1 percent in 2009, according to AP’s data.