Housing Taking a Bigger Bite of Family Budgets

Americans are becoming increasingly house-poor.

Homeowners in every state but one spent more of their incomes on housing last year than at the start of the decade, data released Monday by the Census Bureau showed. Those in Alaska spent the same.

Nationwide, homeowners spent nearly 21% of their incomes on housing costs last year, up from just under 19% in 1999.

California stands out among states with high housing costs. It ranked No. 1 in median home value, at $477,700; No. 2 in monthly housing costs for homeowners, at $1,912; and No. 2 in monthly costs for renters, at $973.

Nearly half of California homeowners -- 48% -- spent more than 30% of their incomes on housing last year.

“We really are reaching the outer edge of the envelope of what people can manage,” said Cynthia Kroll, senior regional economist at UC Berkeley.

Housing analysts blamed surging home prices, higher interest rates and lower incomes for reducing affordability.

“It is now much more difficult for first-time home buyers to get into the market and for existing homeowners to trade up,” said Mark Zandi, chief economist at Moody’s Economy.com.

“This decline in affordability is the catalyst for the current sharp decline in housing activity,” he added.

The housing market has gone soft in many areas, but prices are still much higher than they were at the start of the decade. Nationwide, median home values jumped 32% from 2000 to 2005, to $167,500.

Household incomes have not kept up, dropping 2.8% during the same period.

“Until incomes catch up, the housing market is going to remain flat,” Zandi said.

America’s homeownership rate is at a near-record 68.7%. But some housing advocates warn that declining affordability will make it difficult for low-income owners to keep their homes.

For example, the government calls housing costs excessive if they top 30% of household income. Nationally, 34.5% of homeowners with a mortgage had housing costs that topped that benchmark in 2005. The rate was 26.7% in 1999.

Housing costs are defined as mortgage payments, taxes, insurance and utilities.

“Families want to become homeowners, and they are willing to spend more to get there,” said Jeffrey Lubell, executive director of the Center for Housing Policy, which advocates for affordable housing.

“But as they spend more and more, they are taking on mortgages that could put their homeownership at risk,” Lubell said.

The Census Bureau released 2005 housing data from the American Community Survey, which is replacing the “long form” on the 10-year census. Starting this year, the annual survey of about 3 million households provides data on communities of 65,000 or larger. By 2010, it will provide annual multiyear averages for the smallest neighborhoods covered by the 10-year census.

The Census Bureau previously released data on incomes, poverty, race and ethnicity.

Among the other findings released Monday:

* New Jersey had the highest monthly housing costs for homeowners, at $1,938.

* West Virginia had the lowest monthly costs for homeowners, at $797.

* Hawaii had the highest monthly costs for renters, at $995.

* North Dakota had the lowest monthly costs for renters, at $479.

* Mississippi had the lowest median home value, at $82,700.

* Among America’s 15 largest cities, San Francisco had the most expensive homes, with a median value of $726,700. Detroit had the least expensive, at $88,300.

* San Diego had the biggest increase in median home value from 2000 to 2005, rising from $249,000 to $567,000.