So many families are now paying half or more of their income to pay housing costs that they have little left to support their children, according to the latest State of the Nation’s Housing Report from the Harvard Joint Center for Housing Studies.
Some 18.6 million American households spent more than half their income on housing costs last year, up from 13.8 million in 2001. Nearly half, 45.1 percent, are renters in the bottom income quartile. With long-run housing costs outpacing income growth, families must make tradeoffs and many choose to spend less on other necessities such as food, healthcare, and savings in exchange for better housing.
Many householders with incomes that are one to three times the full-time minimum wage equivalent still have to devote at least half their incomes to housing.
Middle and lower income households with children are dedicating more than half their outlays to housing, leaving less than $600 per month left for all other necessities-less than half the amount available to households with affordable housing. Similarly burdened elderly and single person households had even less (under $500) left over after housing expenses
Lower housing costs often mean higher travel costs and times. On average, low-income households with children that spent less than 30 percent of monthly outlays for housing devoted 4.4 times as much to transportation as those with high housing outlays. Even those households with affordable housing still had to dedicate over 37 percent of their total outlays to housing and transportation combined, the Harvard study reported.
Even though the acute housing affordability problems of very low-income renter households (with incomes half or less of area medians) has long been a focus of national housing policy, only about one-quarter of eligible renter households report receiving housing assistance.
Homeowners as well as renters have suffered during the past ten years. After at least three decades of progress, real median household incomes will almost certainly end the 2000s lower than they started. At last measure, the median for all households was $49,800 in 2008, down from $52,400 in 2000. Even at their last cyclical peak in 2007, real median incomes were 1.2 percent below 2000 levels, the study found.
On a per household basis, real household wealth slid from $503,500 to $486,600 over the decade. After an $8.2 trillion plunge in housing wealth since the end of 2005, mortgage debt entered 2010 at 163 percent of home equity. Mortgage debt has never been higher relative to home equity.
The State of the Nation’s Housing, released annually by the Joint Center for Housing Studies, provides a periodic assessment of the nation’s housing outlook and summarizes important trends in the economics and demographics of housing. The report continues to earn national recognition as a source of information regularly utilized by housing researchers, industry analysts, policy makers, and the business community.
The Joint Center for Housing Studies is Harvard University’s center for information and research on housing in the United States. Established in 1959, it is a collaborative unit affiliated with the Graduate School of Design and the Harvard Kennedy School. The Joint Center analyzes the dynamic relationships between housing markets and economic, demographic, and social trends, providing leaders in government, business, and the non-profit sector with the knowledge needed to develop effective policies and strategies.
(for a copy of the study, go the link at the top of the story)