Get All Access for $5/mo

The Inability to Afford a Down Payment Is Why Renters Keep Renting, According to a New Report from the Federal Reserve Only 63% of respondents said they could cover a $400 emergency expense.

By Madeline Garfinkle

Opinions expressed by Entrepreneur contributors are their own.

SORANAT7 | Shutterstock

The financial well-being of Americans has declined significantly over the past year, according to a new report by the Federal Reserve. In 2022, 73% of Americans reported doing "at least okay" financially—down five percentage points from 2021. Only 34% of those doing "okay" reported "living comfortably."

Furthermore, a tight housing market and an increase in mortgage rates are the reasons why renters can't buy a home.

While 36% of renters said they prefer to rent, 65% reported doing so because they can't afford a down payment to buy. Plus, 44% percent said they couldn't afford a monthly mortgage payment, and 40% said they don't qualify for a mortgage.

Related: Here's Where Average Monthly Mortgage Payments Are The Lowest in The U.S.

Among the report's most striking findings is that when asked the highest amount one could spend on an emergency expense using only savings, 18% reported only being able to cover an expense under $100. Sixty-three percent said they could cover a hypothetical emergency expense of $400 (down five percent from the year prior).

Persistent inflation has also impacted spending and financial strain over the past year. Thirty-three percent of Americans noted inflation was the biggest financial challenge in 2022. Nearly two-thirds of people stopped using a product or reported using it less because of inflation, 64% reported switching to a cheaper product, and 51% saw a reduction in their savings in response to higher prices.

Related: Here Are the Cities Where Inflation Is Rising the Most, According to a New Report

Madeline Garfinkle

News Writer

Madeline Garfinkle is a News Writer at Entrepreneur.com. She is a graduate from Syracuse University, and received an MFA from Columbia University. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business News

Here's What the CPI Report Means for Your Wallet, According to JPMorgan and EY Experts

Most experts agree that there will be another rate cut next week.

Leadership

3 Ways Your Parenting Skills Can Improve Your Leadership Skills

Parenting and management offer valuable lessons in identifying talent, nurturing potential and fostering growth through encouragement and guidance.

Business News

'You Own Nothing Here on Social': Meta Outage, Looming TikTok Ban Has Creators Questioning How Much of Their Business They Really Control

With repeated tech outages and a possible TikTok ban on the horizon, creators are looking for new ways to influence. Turns out, one old-school way still reigns supreme.

Operations & Logistics

The Holidays Mean Vacation Time — But Disaster Can Still Strike. Is Your Crisis Plan Ready?

Holidays mean different working hours for companies and different schedules for employees that take off. Before you and your team enjoy some much deserved time off, it is important to put a crisis management plan in place so your business is ready to tackle any issue that crops up.