Wed, 29 Feb 12
In the wake of the housing bust, almost 1 in 4 working families spend more than half their income on housing costs, according to a new study.
The study by the Centre for Housing Policy found that both home-owners and renters continue to struggle with housing costs since the market tanked in 2008. Between 2008 and 2010, renters saw their median income decline even as housing costs rose, while home-owners’ loss of income outpaced a modest drop in housing costs. Experts typically warn against using more than 30 percent of pre-tax income toward housing costs.
In 2010, the latest year in which data was available, there were 10.6 million households with more than half their income going toward housing, including utilities. A total of 23.6 percent of working households fell into that precarious category -- up 1.8 percentage points from 2008. (The study defines working households as those that make less than 120 percent of an area’s median income and work at least 20 hours a week.)
With prospective buyers finding it harder to qualify for a mortgage and job security remaining a top concern for many families, rental demand has surged in past years, driving up costs. For home-buyers who purchased using risky loans with little equity (small deposits) during the boom years, high interest and sliding home values have pushed thousands underwater, with insufficient savings to escape the cycle.
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