Between 2005 and 2008, housing affordability worsened despite the downward slide in existing home prices under increasing pressure by mounting foreclosures during that period. And even as these trends persist today, homeowners—and especially working owners—might still find themselves paying a higher portion of their household spending for shelter.

These are some of the conclusions that the Washington, D.C.-based National Housing Conference's Center for Housing Policy draws in a study on housing affordability it released on Thursday morning. That study is based on the Center’s analysis of the government’s latest American Community Survey data.

The median price for an existing home fell to $198,000 in 2008 from $221,900 in 2006, and is expected to drop another 12% in 2009. In addition, the number of foreclosed homes that are returning to the market, many at significant discounts from the value of their mortgages, has created a buyer’s market for customers with good credit scores and access to credit.

However, the Center found that the portion of U.S. households that were spending more than half of their monthly incomes for housing and utilities actually increased to 15% in 2008, from 14% in 2005. The share of working households—which represent nearly 42% of all households—spending more than half of their incomes on housing increased to 21% in 2008, from 20% three years earlier.

There are several reasons for this, the Center’s report explains. For one thing, incomes for working owners and renters rose at a slower rate—13%—than household inflation during this period. Home utility costs alone jumped 23% in over these three years. It’s also worth noting that the “vast majority” of working households with ‘severe’ housing cost burdens earned less than 80% of their areas’ median income levels.

What's worrisome, though, according to the Center's analysis, is that compared to 2005, a bigger share of working owners with severe housing cost burdens in 2008 had incomes above 51% of their areas' median income, and fewer had incomes below 30%. "This suggests that between 2005 and 2008, the problem of severe housing cost burden climbed up the income ladder somewhat for working owners," in wrote. 

The Center broke down its analysis by region and found that the West had the highest rate of households with severe housing cost burden (26%), and the Midwest the lowest (17%). Compared to 2005, the share of households with severe housing cost burdens in 2008 increased by a small but statistically relevant amount in all regions but the Midwest.  

Percentage of Working Households With Severe Housing Cost Burdens

Highest by State

California 32%

Florida 30%

Hawaii 28%

New Jersey 28%

Nevada 26%

Lowest by State

North Dakota 10%

South Dakota 11%

Alaska 12%

Nebraska 12%

Iowa 13%

Highest by Metro

Miami-Fort Lauderdale-Pompano Beach, Fla 39%

Riverside-San Bernardino-Ontario, Calif. 36%

Los Angeles-Long Beach-Santa Ana, Calif. 35%

San Diego-Carlsbad-San Marcos, Calif. 35%

Orlando-Kissimmee, Fla. 33%

Lowest by Metro

Pittsburgh 14%

Raleigh-Cary, N.C. 15%

Oklahoma City, Okla. 15%

Richmond, Va. 15%

Louisville/Jefferson County, Ky.-Ind. 15%

John Caulfield is senior editor for BUILDER magazine.

Learn more about markets featured in this article: Washington, DC, Los Angeles, CA, San Diego, CA, Riverside, CA, Miami, FL.