Housing Burden Rises As Prices Fall

More Are Spending Over Half Their Income, Study Says

December 18, 2009|By Jamie Smith Hopkins | Jamie Smith Hopkins,jamie.smith.hopkins@baltsun.com

The silver lining to falling home prices - which have caused so much distress nationwide - is more affordable housing. But a new study suggests that costs are actually mounting for a growing number of people here.

The nonprofit Center for Housing Policy's report, released Thursday, found that more middle- and lower-income workers were spending over half their income on housing expenses last year than at the peak of the housing bubble. That was true for 20 percent of these workers in Maryland last year, up from 16 percent in 2005.

Nationwide, 21 percent of middle- and lower-income workers were spending more than half their income on housing costs last year, up from 20 percent three years earlier.

The Center for Housing Policy noted that the problem has likely worsened this year. Incomes rose between 2005 and 2008, it said, but several million more Americans are out of work now.

The center, which based its research on American Community Survey data, said the "severe housing cost burden" problem is felt most keenly by homeowners rather than renters. Falling values are bad news for people with mortgages.

"So while housing prices have declined for those buying homes in the current market, this has not led to lower housing costs for homeowners overall, presumably because most homeowners have stayed put," the report notes.

One rising cost that affected renters and homeowners alike: utility bills, which are included in the housing-expense calculation.

The Baltimore metro area's experience closely mirrors the state's. Nineteen percent of middle- and lower-income workers spent more than half their income on housing expenses last year, up from 16 percent in 2005.

The center looked at workers in households bringing in no more than 120 percent of their area's median income, which in the Baltimore region was $71,000 last year.

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