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Carmen Ramirez, and her husband, Ricardo, moved into assisted-living when emergency expenses cost them their condo in the Bronx.

MOUNT PLEASANT, SOUTH CAROLINA >> It's a troublesome story playing out across America 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 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 nation 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.

Bleak forecast

"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."


Joe Fabie and his wife face just such a bind. They moved to Mount Pleasant, just over the bridge from historic Charleston, South Carolina after law school in Pittsburgh. The suburb's pastel-hued harbor vistas, tin-roofed houses and Spanish moss-adorned live oaks were enchanting.

But the rising rent on their one-bedroom apartment — more than for their three-bedroom rental in Pittsburgh — made it impossible to save enough to buy a home. With their rent going up again, the couple moved to a cheaper suburb in hopes of repaying their student debt and saving for a starter home.

"The best school district is Mount Pleasant, and we would like to be there," said Fabie, 27. "But if you're lucky you can get some beat-up homes for around $300,000."

An exclusive analysis by The Associated Press of census data covering over 300 communities found that two major forces are driving a wedge between the fortunes of renters and homeowners:

• Historically low mortgage rates have enabled homeowners to refinance and shrink their monthly payments, thereby reducing a major household cost. The median annual mortgage expense for a U.S. homeowner has dropped by $1,492 since 2006.

• A combination of foreclosures and new college graduates crowding into the strongest job markets has raised demand for rentals. Renters accounted for all the 8 million-plus net households the United States added in the past decade. Home ownership has dipped to 63.5 percent, near a 48-year low.

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.

These trends are reflected in how and where Americans live. Suburban cul-de-sacs built for owners are now tilting toward rentals, especially in such areas as Orlando, Las Vegas and Tampa, where the bubble and crash were especially intense.

After the bust, investors bought distressed houses in these communities at sharp discounts and rented them out. Many of the new tenants belong to Generation X households — ages 35 to 51 — that began renting after the crash, according to the Harvard University Joint Center for Housing Studies.

Rents have also jumped in areas that absorbed many young college-educated job hunters. These workers have increasingly clustered in areas, including Boston, San Diego and Washington, with abundant jobs but high housing costs. The result is delayed home ownership for a population group that historically had the means to buy.

The AP analysis also found a contrasting belt of stability across the Midwest where the housing boom and meltdown had little effect on homeownership. Rates of ownership remained relatively stable, for example, in Minneapolis, St. Louis and Kansas City, Missouri, where starter homes are comparatively affordable.

Large transformations

But the transformations have been vast in other areas, particularly in smaller suburbs where much of the country lives.

Both before and during the housing boom, farmland around the country was bought cheaply and developed into houses, schools and shopping plazas — a build-out that ignited homeownership. Now, in a twist, many of those cul-de-sacs are occupied by renters living in homes whose former owners lost them to foreclosure.

To see just how drastically the foreclosure crisis transformed certain neighborhoods from the domain of owners into blocks of rental properties, consider the Orlando suburbs.

The shift has been vivid over the past five years in the Piedmont Park neighborhood of Apopka, a former agricultural hub now crowded with housing developments. Where one in 10 homes was once a rental, now more than a third are. Many are owned by Wall Street investment firms that bought them out of foreclosure at deep discounts.

Erika Pringley, a 42-year-old police dispatcher, rented with her husband a three-bedroom ranch house this year. Through a string of subsidiaries, the house is owned by Blackstone, the world's largest real estate private equity group.

Previously, the house had been owned for eight years by Damian and Eva Elizondo, who lost it to foreclosure in 2013. The Elizondos owed nearly $258,000 on the home; the investment firm bought it for roughly $100,000.

At that price, the equivalent of the monthly mortgage would be under $500.

Pringley's rent: $1,310 a month.

Pringley, who works for the Florida Highway Patrol, hopes to buy a home — if she can emerge from debt.

"I'm kind of tired of paying for somebody else's property," she said. "At my age, I want to own something that's my own, have something that's my own."

Making that leap to ownership is becoming harder for typical Americans. The average first-time buyer makes $84,559, much more than the average household income of $75,037 — the widest such gap in over 15 years, according to an analysis by the online housing marketplace BuildZoom.

The residue of the housing bubble also remains achingly visible in Las Vegas, where the gamble of no-money-down, interest-only mortgages ignited a rush of construction in 2006 that led to mass foreclosures.

Vegas recovered slowly. Tourists returned to the casinos. Population growth picked up as retirees flocked to the Nevada desert. Ikea opened its first Las Vegas outlet, not far from where 8,000 apartment units are planned for construction.

Still, thousands of houses are stuck in the foreclosure pipeline, controlled by banks, and could flood the market should prices recover enough. Nearly half of Las Vegas now rents, compared with less than 40 percent a decade ago.

This closes one of the paths to accruing wealth. On average, homeowners have a net housing wealth of $150,506, according to figures soon to be released by the Urban Institute's Housing Finance Center. That average climbs to $229,296 for those who own their homes free and clear, making the house an asset that provides a crucial financial cushion.

Elsewhere, rising prosperity is the reason why renters are stuck.

Just as the economy tanked nearly a decade ago, millennials began flooding the job market after college and graduate school. The most educated tended to cluster in cities where jobs were still plentiful, such as Boston, San Francisco, and San Diego. They now pay historically high rents — a result of too few apartments to meet demand and too few renters with enough savings to buy.

Over the past decade, the number of under-35 college graduates in Washington rocketed up more than 50 percent to nearly 100,000. Bistros, boutiques and posh gyms opened along the once-downtrodden 14th Street corridor. Builders erected condos and rehabbed old buildings into apartments.

All this has created a paradox in Washington: Incomes are rising — normally fuel for home buying — even as homeownership is declining. Average household income in the district has climbed an inflation-adjusted 8.7 percent since 2006 to $104,615, according to the Census Bureau. Yet ownership has dipped to 41.6 percent, from 45.8 percent.

Ultra-low mortgage rates have enabled Jim Phillips, 51, to capitalize on the influx, buying condos and renting them at a profit.

"With more and more younger people moving into the city, it's creating an opportunity for me," Phillips said. "So far, I have two condos. My goal is to buy, basically, one a year."

The opportunities are there for people who have money — or those who are already homeowners.

Americans have refinanced $9.4 trillion of mortgage debt after the bubble burst, according to the Mortgage Bankers Association. New mortgages at under 4 percent interest have freed up thousands of dollars annually for households in several metro areas, according to Census figures.

Alpana Patel and her husband landed a house in San Marcos, California, about 35 miles from San Diego, in 2007. To buy their $845,000 home, they took out an interest-only mortgage with an adjustable rate starting 6.7 percent. Including property taxes and insurance, their monthly costs totaled about $6,000.

The couple kept paying the mortgage through the housing bust before refinancing in 2013. Their new mortgage charged just 3.75 percent, which shrank their monthly payment by $2,000 and allowed them to build equity.

"We're actually able to pay down our mortgage, because initially we were just paying interest only," said Patel, a 42-year-old real estate agent.

The couple eventually decided to rent out that house at a price that covers nearly all their mortgage costs and to buy a second, larger home where they could live.

"Now, we're able to own two homes because we hung in there," Patel said.

What the housing recovery presented was a rare opportunity to capitalize on mortgage rates that had never dipped so low in anyone's lifetime. But even while millions of renters struggle to save enough to buy, many such homeowners have never had it so good.

"They're basically taking advantage of the changing economics of home ownership in ways that renters can't," said Andrew Jakabovics, senior director of policy and research at the affordable housing nonprofit Enterprise Community Partners.