Author: Maggie Smith
Introduction
As shown in our recent LEAD Feed article, housing costs rose sharply during the pandemic. Now, many more residents find themselves spending a larger portion of their income on rent or mortgage payments. To better understand housing affordability in North Carolina, this article explores housing cost burden for both homeowners and renters from 2010 to 2023. The U.S. Department of Housing and Urban Development defines “cost burdened” households as those spending 30% or more of their income on housing and utilities. This analysis highlights how cost burden has evolved and which households are most impacted.
How Many Households Are Cost Burdened?
Despite the recent escalation of home prices, cost burden issues have existed for at least the past decade. In 2023, nearly half of all renter households in North Carolina were cost burdened. For homeowners with a mortgage, that share was one-in-four (Figure 1). Although homeowner cost burden declined slightly from 2010 to 2023, renter cost burden has remained relatively stable around 50%.
Figure 1
Household Income Between Renters and Homeowners
Median household income significantly differs between homeowners and renters. In 2023, the median household income for homeowners reached $102,228, more than double the $48,270 median income for renters. The persistent difference in income explains much of the disparity in housing cost burden, as renters simply have fewer resources to allocate toward increasing monthly housing costs.
Since 2010, homeowner median income increased by 58% (from $64,837 to $102,228), while renter income grew by 83% (from $26,422 to $48,270). The income gap between homeowners and renters in percentage terms has narrowed between 2010 and 2013, even though the median income difference in dollars has grown from $38,415 to $53,958. In 2010, renter income was 41% of homeowner income, while in 2023, renter income reached 47% of homeowner income.
Figure 2
Housing Costs Compared to Income
Despite median household income gains for renters, the percentage of cost burdened renters remained around 50%. This is due to monthly housing costs closely mirroring the growth in income for this group. Figure 3 compares the percentage change since 2010 in median household income and median monthly housing costs for both homeowners and renters. Note the rise in costs for both homeowners and renters from 2019 - 2023. Read more about rising home prices during this time in our recent LEAD Feed article.
For renters, median household income grew by 83% since 2010, just narrowly outpacing housing cost increases of 70%. In contrast, homeowners experienced a more favorable income to cost ratio. Their median household income grew by 58% while housing costs increased by just 26% from 2010. In addition, homeowner housing costs actually declined in the early 2010s before beginning to rise again. This helps explain why homeowner cost burden has decreased from 2010 to 2023, while renter cost burden has remained fairly consistent in North Carolina (Figure 1).
Figure 3
Conclusion
These findings provide insight into the housing affordability trends in North Carolina, highlighting the contrasting financial circumstances between homeowners and renters across the state. The charts show that renters consistently experience higher rates of cost burden than homeowners, with almost half of all renters spending 30% or more of their income on housing. While both groups have seen income growth over this period, the gap in median household income remains substantial. Additionally, the data reveals that housing costs have risen significantly more for renters than for homeowners when measured as a percentage change since 2010.
Using the standard 30% income threshold for housing costs, nearly half of renters and a quarter of homeowners with a mortgage in North Carolina are considered cost burdened. However, alternative measures, such as the residual income method, suggest the actual number of households facing financial strain may be even higher, particularly among households with children. Addressing housing affordability is essential not only to support individual household stability, but also for the broader economic health and resilience of communities across the state.