Way Too Many Americans Spend Most of Their Income on Rent
Throughout America, the housing market has recovered so well from its collapse five years ago that we're already talking about the next collapse. This has been great news for current homeowners. But for poor people who would prefer not to be homeless, times are only getting harder.
The Harvard University Joint Center for Housing Research's annual report on the state of housing in America is out (as if we had to tell you!). The good news: the housing recovery is "well underway," with home prices up by nearly 12% in the past year; home sales were up 20% in 2012; and home improvement and construction spending are contributing positively to the economy once again.
The bad news: this is a terrible time to be poor and want to live indoors. Even worse than usual. The rental market is tightening. Homeownership rates have fallen for eight straight years. Household incomes are down over the past decade. Low-cost apartments are continually disappearing from the housing stock. And the housing picture for the poor in America is far from sunny. A few key stats:
-On average, real home values for Hispanic owners plummeted nearly $100,000 (35 percent) between 2007 and 2010, while the decline for black owners was nearly $69,000 (31 percent). By comparison, average values for white homeowners fell just 15 percent over this period.
-In 2011 42.3 million households, or 37 percent, faced housing cost burdens, paying more than 30 percent of pre-tax income on housing costs, including 20.6 million households (17.9 percent) with severe cost burdens, paying more than 50 percent of pre-tax income for housing.
-Nearly seven out of ten households with annual incomes of less than $15,000 (roughly equivalent to year-round employment at the minimum wage) pay more than half of their income for housing costs.
The number of "extremely low-income renters" has increased by 2.5 million since 2007. There are currently almost twice as many of these poor renters as there are housing units affordable enough for them to rent.
