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Housing Costs Excessive, Census Reports

Nearly 38 percent of homeowners with mortgages spent 30 percent or more of their gross income on housing costs last year.

Gone are the days when house payments represented no more than a quarter of your income. Now, for many Americans, housing costs are through the roof.

According to a recent Census Bureau report, nearly 38 percent of homeowners with mortgages spent 30 percent or more of their gross income on housing costs last year. Fifteen percent, or more than 7.5 million people, used up half of their income—or more—on housing.

Housing costs—defined as mortgage payments, taxes, insurance and utilities—are considered excessive by the government if they surpass 30 percent of household income.

Jeffrey Lubell, executive director of the nonprofit Center for Housing Policy, the research arm of the National Housing Conference, says high housing costs may be causing Americans to give up other necessities, such as food and medicine.

The increase in housing costs is staggering, according to a study by Lubell’s group released in October. Between 1996 and 2006, mortgage payments rose 46 percent; utilities, 43 percent; property taxes, 66 percent; and property insurance, 83 percent.

Yet incomes are not catching up. During the same period, the study found, homeowners’ wages increased by 36.3 percent.

“A lot of people who are bearing the brunt of this are older Americans,” Lubell told AARP Bulletin Today. “It’s a difficult situation, particularly for people who don’t have the ability to increase their incomes.

“They’re not going to sell their homes and move unless they have to,” he says. “A lot of them want to age in place, so I don’t see this problem as one that is going away.”

In San Francisco, homeowners were squeezed the most. About one in five mortgage holders spent half or more of his or her income on housing. In the Miami-Fort Lauderdale area, 58 percent of homeowners spent at least 30 percent of their income on housing costs, and 29 percent spent half of their income or more on housing in the decade ending in 2006, the data show.

Other highlights of the Census data include:

  • Among the 20 largest metro areas, San Francisco had the highest median home value, $706,100. The Houston metro area had the lowest at $135,800.
  • Homeowners with mortgages in California and New Jersey had the highest median monthly housing costs in the nation—$2,314 and $2,278, respectively.
  • Homeowners in West Virginia, at $881, and Arkansas, at $920, had the lowest.

Carole Fleck is a staff writer for AARP BulletinToday.

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