Census: Housing takes more money
By Thomas A. Fogarty, USA TODAY
In a nasty flip side to the USA's 6-year-old housing boom, more Americans are devoting a larger share of income to keeping a roof over their heads. Data released Tuesday from the 2000 census show an estimated 19 million American households are spending 35% or more of monthly income on housing costs, vs. 16 million in 1990. The new estimate, which includes homeowners and renters, is based on the Census long form sent to one-in-six U.S. households. The higher proportion of Americans stretching finances to house themselves comes as no shock. But the new numbers bring into sharper focus the dimensions of problems related to the run-up in home prices.
In April, regional median home prices — the sales midpoint — ranged from $213,300 in the West to $129,900 in the Midwest. "For the last five years, there's been more concern about affordability," says Patrick Simmons, a Fannie Mae Foundation demographer.Lenders at one time insisted that mortgage borrowers keep monthly housing costs to less than 28% of household income. But that standard has largely disintegrated. Lenders now are more willing to assess risk case by case.Simmons says the increase in households devoting 35% or more of income to housing costs raises the possibility of more mortgage delinquencies and home foreclosures, though he sees no evidence of a serious problem yet.On Tuesday, the Mortgage Bankers Association of America reported that 4.65% of mortgage borrowers were behind in payments in the January-March quarter, up from 4.37% a year ago. An additional 1.1% were in foreclosure proceedings during the quarter, up from 0.9% a year ago.MBAA chief economist Doug Duncan says the increase is the apparent effect of higher joblessness.After struggling out of a steep economic downturn in the first half of the 1990s, the U.S. housing market caught fire in 1996. The volume of home resales has set records every year except one since then.Home prices have increased in every local market. The Census Bureau says the number of homeowners soared 18% during the 1990s.But Census data also show the monthly costs of home ownership for Americans with a mortgage grew faster than household income over the decade, creating the affordability crunch.According to the new Census data, the median — or midpoint — for house payments is $1,088, up 16% from 1990 after accounting for inflation. Median household income, adjusted for inflation, rose less than 8% over the decade.Due largely to the huge surge in home ownership, and the resulting loss of tenants, landlords have been forced to restrain rent increases.The Census Bureau pegs median monthly rent at $602, which means renters, in inflation-adjusted terms, are spending only about 5% more for housing then they did in 1990.The new figures show that the affordability crunch has not hit all regions equally. Hardest hit: Puerto Rico, California, Hawaii, New Jersey and Nevada.Contributing: Barbara Hansen