Across Nation, Housing Costs Rise as Burden

The New York Times
N.Y. / Region

Across Nation, Housing Costs Rise as Burden

By JANNY SCOTT and RANDAL C. ARCHIBOLD
Published: October 3, 2006

The burden of housing costs in nearly every part of the country grew sharply from 2000 to 2005, according to new Census Bureau data being made public today. The numbers vividly illustrate the impact, often distributed unevenly, of the crushing combination of escalating real estate prices and largely stagnant incomes.

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Burden of Housing Debt Rises

While many of the highest home values were on the coasts, in places like Southern California and Manhattan, many of the biggest jumps in the percentage of people paying a burdensome amount of their income for housing occurred in the Midwest and in suburbs nationwide, making it clear that the housing squeeze has reached deep into the middle class.

In New York City, more than half of all renters now spend at least 30 percent of their gross income on housing, a percentage figure commonly seen as a limit of affordability. In Staten Island, the percentage paying at least 30 percent of income rose to nearly 60 percent, up from 40.
Among suburban homeowners, there were big increases in the percentage of people with mortgages spending at least 30 percent in places like Loudon County, Va.; Morgan County, Ind.; Nassau County, on Long Island; and Bastrop County, Tex.

“Housing prices have gone up much more than incomes have,” said Christopher Jones, vice president for research at the Regional Plan Association in New York City. “Clearly, you can’t sustain that sort of imbalance over the long run. There’s only so long that housing prices can go up without sustained increases in income to support them.”

The data, from the American Community Survey, was collected throughout 2005, some of it before the real estate market began softening over the past year.
While the escalation in house prices that began in the mid-1990’s has slowed down in most places, and while prices are even dropping in some markets, rents are currently rising.
Historically, it is not unprecedented for housing prices to rise faster than household incomes, since housing prices fluctuate more than median incomes. In recent decades, median incomes have not risen at the rate that they did in the booming 1950’s and 1960’s, yet real estate prices in many parts of the country have escalated sharply in recent years.
“People want to hang on and stay in the market,” said William H. Frey, a demographer at the Brookings Institution in Washington, “and they are willing to stretch themselves to find or to rent a house that is suitable.”
The places with the highest overall percentages of people carrying a heavy housing burden were in fast-growing areas of California, Colorado and Texas.
In Southern California, Temecula and Hemet had the highest percentages of renters paying at least 30 percent, with 74 and 73 percent of renters at that level.
Boulder, Colo., and College Station, Tex., held the record for renters spending at least 50 percent, with 47 and 46 percent.
The biggest jump in the percentages of people paying at least 30 percent of their income on rent, as well as those spending at least 50 percent, occurred in Olathe, Kan., a booming suburb of 114,000 southwest of Kansas City.
S. Lawrence Yun, an economist with the National Association of Realtors, said renters in desirable cities might be spending more of their income on housing in hopes of getting a toehold in places with good schools, better homes and a good quality of life. He said, “There is certainly a concern that people are devoting a large portion of their income to housing, and one of the reasons is due to the more limited housing supply.”

In the New York region, a very high percentage of renters in urban counties spent a big share of income on housing. In the Bronx, Brooklyn and Queens, close to a third of all renters pay at least 30 percent.
But many of the biggest increases in housing burdens occurred outside the city.

Among homeowners, there were big increases in the percentage of people spending at least 30 percent on housing in counties like Nassau, Dutchess, Orange and Putnam. The percentage of households spending at least 50 percent of income also rose in those counties.

In Clifton, N.J., the percentage of mortgage holders spending at least 50 percent of their income on housing rose to 27 percent in 2005 from 12 percent in 2000, a 134 percent rise. In New Britain, Conn., the group paying at least 30 percent more than doubled, rising to 57 percent of people with mortgages, up from 27 percent.

Nationally, the biggest increase in homeowners spending more than 30 percent of their income on housing occurred in an unincorporated area southeast of Los Angeles called Florence-Graham, where more than a third of residents live in poverty. There, the figure climbed to 43 percent from 17 percent. Other places with big jumps included Wyoming, Mich.; Round Rock, Tex.; and Plymouth, Minn.

In general, the places with the highest overall percentages of homeowners spending that level of income were poorer cities. El Monte, Calif., a Los Angeles suburb, had the highest percentage of mortgage holders, 73 percent, spending more than 30 percent of their income on housing. In Newark, the figure was 72 percent; in El Cajon, Calif., east of San Diego, 69 percent; and in South Gate, Calif., 69 percent.

Jack Kyser, senior economist with the Los Angeles County Economic Development Corporation, said such cities are often the only places that people on the lowest rungs of the economic ladder can afford and they tend to stretch their resources to get in. He said El Monte and South Gate both are growing, largely because Latinos have been moving in.

“These communities are well located to employment opportunities and they can drive and it is not a horrendous drive,” he said. “They are also close to public transportation and use it.”

The numbers, which were analyzed for The New York Times by Andrew A. Beveridge, a demographer at Queens College, provided a glimpse of how hot — and how unhot — some areas had become.

Two Southern California coastal cities, Santa Barbara and Newport Beach, had the highest median house values, at $1 million.

Youngstown, Ohio, a city long hurting economically, had the lowest, at $48,000.

In New York State, the median value of owner-occupied homes actually declined slightly in a few upstate counties, including Oswego, Steuben and Madison. The median house value dropped 9 percent in Buffalo, to $60,800.

Housing values rose only barely in some upstate counties, including Cattaraugus, Cayuga, Chautauqua and Chemung.

Because of a change in census procedures, it was not possible yesterday to reliably gauge the increase in cost burden among homeowners in places with large numbers of condominium or cooperative apartments.

In 2000, the bureau did not count owner-occupied apartments in multifamily buildings; in 2005, it did. So the 2000 and 2005 figures could not be satisfactorily compared for places like Manhattan and San Diego.

In Manhattan, where the median value of all owner-occupied homes hit $718,000, the increase in median gross rents from 2000 to 2005 was 14 percent, well below the 20 percent jump in Suffolk County on Long Island, the 23 percent rise in the city of Passaic, N.J., and the 24 percent jump in Ulster County, N.Y.

The increase in the percentage of Manhattan renters paying at least 50 percent of their income on housing was 13 percent — well below the 50 percent rise in Rockland County.

The data also showed that, among couples living together in Manhattan, about 17 percent were unmarried in 2005, compared with 10 percent nationwide.

Manhattan appeared to have the second highest number of male couples living together, following Los Angeles.

Sam Roberts contributed reporting.