Recently, J.D Roth at Get Rich Slowly asked his readers how much they spend on housing, and not surprisingly many people weighed in on the subject. Housing is one of the hardest things to live without – the hardest of course being food!
While reading through the comments, I thought about how many different housing options we have – from sharing flats, to living with parents, to a house in the country. Through most of the stories, one item remained true – happiness seems to live somewhere within the 20%-30% range of total income spent on housing. Spend more than that, and the pinch is on. In fact, I recommend you only spend 2x your annual income on a house.
So, how much does the average American spend on housing? I found this great information from the US Census Bureau which details our housing expenses. The average annual income in the survey is $60,753 (2009); which is above the current average household income at $49,445.
Here’s a look at what the average US household spends on housing:
This is a very comprehensive view of housing expenses which includes everything you can imagine; from mortgage payments and maintenance, all of the way down to postage stamps! I’d hate to be the guy who tracks how much Americans spend on postage stamps…
According to this survey, the average survey respondent spent $1,408 monthly on home expenses in 2009. The highest category is shelter which includes mortgage, property taxes, and rent while the lowest category is housekeeping supplies. Not surprisingly, utilities is the second highest category.
The other important part of these stats is the ten year change. Overall, housing expenses have increased 40% in the last ten years! This is very surprising, especially considering the major real estate downturn which brought home values down. Granted, the data is from 2009 so it might be a little lower now.
Where are the additional increases in expenses coming from?
The main increases have come from items we can’t easily decrease our spending on. As noted in the chart above, the highest increase came from “Utilities, fuels, and public services”. Within that category, “Fuel oil and other fuels” increased by 90%, “Natural gas” by 79%, “Water” by 68%, and “Electricity” by 53%. We can’t easily cut back on these items, and they’ll continue to rise as oil prices rise.
Items that we do have more control over have decreased. The most obvious example is “Household furnishing and equipment” which increased by only .47%. Within that category, “Floor coverings” has decreased by 32%! Apparently we’ve learned to cover our floors much cheaper… we have concrete floors in half of our house so that help explains the decrease! “Furniture” spending is down 6%.
Have you seen similar increases in your housing expenses? How have been able to reduce some of the categories?