Home values may be sliding, but housing costs just keep rising, according to new analysis by the Center for Housing Policy. In a report released today, the Washington, D.C.-based group noted that housing costs have jumped nearly 65 percent between 1996 and 2006, far outstripping the increases for food, transportation, and health care over the same period.
Overall, homeowners increased the percentage of their household income spent on housing by 4.7 percentage points between 1996 and 2006, to 26.2 percent, according to "Stretched Thin: The Impact of Rising Housing Costs on America's Owners and Renters."
Americans have certainly felt the pinch in their pocketbooks from this trend. “Over the decade, all the major categories of homeowner expenses increased faster than incomes,” the report states. “Mortgage payments increased 46 percent, utilities 43 percent, property taxes 66 percent, and property insurance 83 percent. By contrast, homeowner incomes increased by 36.3 percent.”
That disconnect between housing costs and income has proved particularly problematic as home prices have eroded and the economy has struggled. The Wall Street Journal reported today that nearly one in 6 homeowners owes more on their mortgage than their house is worth.
“By documenting the substantial increases in a wide variety of housing expenses, this study shows that the nation’s housing concerns extend beyond higher mortgage payments,” said John McIlwain, chairman of the Center for Housing Policy and a senior resident fellow at the Urban Land Institute, where he is also the ULI/J. Ronald Terwilliger Chair for Housing. “To get the American economy back on its feet, we will need to look comprehensively at helping Americans afford the full ‘costs of place,’ which include the costs of shelter, utilities, and transportation.”
Alison Rice is senior editor, online, at BUILDER magazine.
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