Until the recent trend of home value gradually increasing, home prices plummeted for around two years. Despite the major fall in home prices, many Americans now find it more difficult to be able to afford their homes. Census data released on September 21 stated that over 40 million people in the United States spent at least 30% of their household income on housing costs. That 40 million is 600,000 higher than the numbers released by the Census Bureau in 2008 for 2007. Those numbers include renters and homeowner that have and don’t have mortgages. Also, according to the data obtained, the number of renters increased while the number of homeowners in the U.S. declined.
When the data is analyzed, the numbers are troubling. The number of renters in the United States spending at least 30% of their household income is about 17.4 million, or around 49.8% of renters; the number of homeowners with mortgages that are spending at least 30% of their household income is about 19.4 million, or around 37.7% of homeowners with mortgages. Even more troubling is the numbers of individuals paying 50% or more of their household incomes towards housing costs: renters with 8.8 million, or about 25.1%, and homeowners with mortgages at around 7.5 million, or about 14.7%. The data obtained considers housing costs to include mortgage payments, insurance, utilities and taxes for homeowners and rent payments, and utilities if they are paid separately for renters.
The data released shows that the lower the average household income, the higher the percentage is of individuals spending at least 30% on their housing costs. The share of home owners with mortgages that are spending at least 30% of their pretax income on housing costs that make less than $20,000 is 97.7%, while those making $35,000 to $49,999 are at 60.4% and those with $75,000 or more are at 16.8%.
In summary, while the prices of the homes in the current housing market themselves are cheaper, the current economy is making it difficult for many Americans to be able to afford to either purchase these homes or pay the existing mortgage payments that they already have. Much of this is do to loss of employment, reduction in wages and hours, and the rising costs of necessities such as food and fuel.
See more:
Local Standards: Housing and Utilities
Retirement.gov – Research, Statistics & Policy Analysis
HUD – Federal Housing Administration
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Sorry, but the figures are a bit misleading, since many of the house owners have (hide) mortgage in the house on holidays, consumption, travel, cars, boats, etc. It was cheaper and easier to take larger loans with houses as collateral. Because of nobody think the house market ever could go down..
Pretty interesting stats. Unfortunately, I don’t see it getting much better anytime soon.
These are definitely hard economic times all around. But I would note that renting has additional costs… when the landlord decides to raise the rent, for example. Or, if the landlord decides to sell the home the renter ends up incurring moving expenses. At least with a fixed rate mortgage the home owner knows what payments to expect in the future.
.-= San Diego Homes´s last blog ..San Diego Luxury Home Foreclosures =-.
That is not great news, thankfully we don’t face that problem where I am. We are the most affordable city in the nation. That is one thing we have going for Indy.
These article just want to explain that people are prioritizing their needs before getting into the higher value of prioritizing it, because it has a big obligation to have.
.-= charleston rentals´s last blog ..Short-Sales, Foreclosures are at Wal-Mart prices but with Wal-Mart customer services – Expect do some leg work when purchasing one of these. =-.
The rise of utility costs consistently over the last several years hasn’t helped either. A good example would be the power company in Las Vegas. They have raised rates every year for the last 8 or 9. So for older homes the impact has been pretty big.
.-= Chas@Las Vegas Real Estate´s last blog ..First Time Home Buyer Tax Credit Extended =-.