Americans Sound Alarm About Not Being Able to Pay Rent

Amid stubborn inflation and high economic uncertainty, a quarter of American renters say they can no longer afford to pay their rent, and around one in five said they'll have to move back in with parents or friends, according to a new study from Intuit Credit Karma.

While there's been a nationwide concern over home prices and mortgage rates, there's another set of Americans unable to make ends meet, and some are being forced to move out of their homes altogether. The renters.

Just under half, or 48 percent of Americans, don't own a home, making rent price fluctuations of extreme importance for many looking to make their dollar stretch.

The renter's dilemma is especially pronounced for Gen Z (12-27 years old), as already 31 percent live with their parents and 27 percent say they can't afford their rent.

However, it's not solely a Gen Z problem. Even 42 percent and 25 percent of Gen X (44-59-year-olds) and Baby Boomers (60-78 years old) say they're compromising on necessities to pay rent, and 46 percent of all Americans believe they'll never own a home, the study found.

"The current housing market has many Americans making adjustments to their living situations, including relocating to less expensive cities and even moving back in with their families," said Courtney Alev, consumer financial advocate at Intuit Credit Karma. "What's most concerning is that rising housing costs aren't just impacting younger generations, but older generations, too."

Intuit Credit Karma showed 57 percent of Americans use the majority of their income on housing costs, with little remaining in their budgets for anything else.

Alev said while rent prices have been rising in most parts of the country for a while, Americans have also had inflation, higher borrowing costs and record-high credit card debt to contend with. That's on top of federal student loan payments that resumed in October.

"Rent affordability challenges plague Americans of all ages, yet coping mechanisms vary by generation," Alev told Newsweek. "Regardless of age, the current housing market has many Americans making adjustments to their lifestyles and living situations."

Because the population is growing, renters are facing a hyper-competitive environment with a limited supply of available homes, ultimately leading to the skyrocketing rent prices, said Erica Brenning, a real estate investor and the owner of cash-buyers.net.

"The current state of the housing market is akin to a frenzied race where everyone is vying to secure a place to call home," Brenning told Newsweek. "The consequence? Skyrocketing rent prices, as individuals find themselves in fierce competition for the limited housing options available."

Altogether, housing-related prices have soared 7.4 percent even as pandemic-era relief like stimulus checks ended.

"When this aid was terminated, many renters became financially vulnerable because they could not withstand the economic turmoil brought about by the pandemic," Debt Consolidation Care attorney Loretta Kilday told Newsweek.

Already, hundreds of thousands of Americans have moved out of high-cost areas into more affordable states in the South because they could no longer afford the cost of living.

"Simply put, reality is starting to set in," Alex Beene, financial literacy instructor for the state of Tennessee, told Newsweek. "Through a combination of slightly higher wages and credit card debt, many Americans have been able to keep their heads financially above water for the past few years, but now salaries are once against stagnant, some businesses are downsizing, and bills are coming due."

If many Americans do end up moving back in with their parents, there will likely be extreme shifts in consumption habits and housing demands. The moves back home also could end up improving the rent problem if demand stalls too far in one direction.

"There will be a decrease in demand for rental properties as more people choose to live with family, which potentially leads to lower rent prices," Jonathan Faccone, the founder of HALO Homebuyers, told Newsweek.

While no generation has been immune to the renters' struggles, it is harder for some to get their hands on property in their own name.

"The population continues to grow, but a significant portion of housing is controlled by older generations and institutional investors," Syed Lateef, the CEO and real estate investor at SyedBNB, told Newsweek. "These properties often remain as investments or are passed down within families, rarely re-entering the market for sale or rent."

Because of this, naturally, more millennials and Gen Z will seek help from their families.

"This is becoming a necessity rather than a choice," Lateef said.

At its peak in 2021, year-over-year rent growth reached 18 percent. While today's rates are far lower, rent is expected to climb between 0 and 2 percent in 2024.