Many financially burdened by housing costs

Associated Press

September 28, 2008

More than 7.5 million people - almost 15 percent of American homeowners with a mortgage - are spending half of their income or more on housing costs, according to 2007 data released Tuesday by the U.S. Census Bureau. That is up from nearly 7.1 million the year before.

Traditionally, the government and most lenders consider a homeowner spending 30 percent or more of their income on housing costs to be financially burdened. But that definition now covers almost 38 percent of American homeowners with a mortgage - 19 million of them.

Though home prices have fallen this year, in the most expensive markets where home prices tripled during the boom, many working families still cannot afford to buy a home.

The data underscore the serious affordability problems in this country and highlight how the slightest financial problem can put a family behind on its mortgage and into the realm of foreclosure.

More than 4 million homeowners were at least one month behind on their loans at the end of June, and almost 500,000 had started the foreclosure process, according to the Mortgage Bankers Association.

Cascading foreclosures over the past two years created a domino effect in the lending industry, undermining investor confidence and forcing the Bush administration last week to announce the greatest rescue package and market intervention since the Great Depression.

Yet the deal will not help Dolly Hanna, 51, and her husband, who bought five homes in the San Francisco area over the past 20 years and were enjoying life during the housing boom by renting them out. But her husband's overtime at his mechanic's job was cut, and the Hannas now find themselves overextended at a loss of $15,000 per month.

In San Francisco, more than one out of five homeowners with a mortgage spends half or more of their income on housing.

That's also true in 13 more of the largest 100 metro areas analyzed by the Associated Press. Other places include the California metro areas of Los Angeles, Riverside and San Diego. Also in the top 10 are the Fort Myers, Sarasota and Orlando metro areas in Florida, and New York-northern New Jersey-Long Island.

But the most cost-burdened homeowners in the country live in the Miami-Fort Lauderdale-Miami Beach metro area: 58 percent of homeowners are spending 30 percent of their income on housing costs, and 29 percent are spending half of their income or more on housing.