America’s renters are in serious trouble

America's renters are facing significant financial challenges. Jacob Ramirez, a 31-year-old café manager, exemplifies this struggle. He accumulated $28,000 in credit card debt by 2023 and is now on track to repay it by 2028. Despite a growing economy driven by artificial intelligence advancements and robust consumer spending, a divide has emerged between renters and homeowners.

Renters, who constitute a third of American households, are increasingly missing payments and resorting to short-term credit, while homeowners remain financially stable.

During the 2007-09 financial crisis, it was homeowners who were hardest hit, with one in 20 mortgages in foreclosure and house prices falling by nearly a quarter. However, in 2025, renters are experiencing a similar strain. According to the Federal Reserve's latest Survey of Consumer Finances, over one in eight renters were at least 60 days late on a loan payment, the highest rate since records began in 1989. A quarter of renters did not pay all their bills in full the previous month, compared to one in ten homeowners.

This widening gap between renters and homeowners can be attributed to several factors. Firstly, there has been a 42% increase in rents since 2019, while renters' household incomes have grown by only 34%. Mortgage holders, however, have seen similar disparities between their housing costs and income growth. Secondly, renters have significantly less savings compared to homeowners.

On average, renters have just $2,000 in liquid savings, while homeowners have $12,000. Additionally, homeowners often utilize their larger investment portfolios to support their spending, whereas renters are forced to rely on their immediate savings or seek short-term credit.

The strain of recent student loan repayments has also added to the financial burden of renters. According to Ted Gayer of the JPMorgan Chase Institute, half of the recent rise in renters falling behind on debts is due to student loan repayments, while only a quarter of that among homeowners. To cope, renters are putting off paying other bills, with late fees on credit cards now more common among them.

Some are even turning to payday loans or paycheque advances, with over one in ten Americans resorting to these forms of credit in 2025, nearly double the rate from 2019. This desperate situation highlights the urgent need for renters to find a way out of the financial crisis they are facing.