A just released report by the Center for Housing Policy reveals that while the U.S. foreclosure crisis resulted in an historic decline in home prices, housing affordability has actually worsened for America’s families.
The report, entitled Housing Affordability Trends for Working Households, examines the relative affordability of housing for low-and moderate-income working owners and renters between 2005 and 2008. The report’s analysis finds that the share of working owners with a severe housing cost burden – that is, the share of households spending more than half their income on housing – rose from 18 to 20 percent during the three-year period studied.
When looked at by states, the report finds that there are five states where for all low-to-moderate income working owners and renters, housing costs weighed most heavily. These are: California, Florida, Hawaii, New Jersey and Nevada.
In Florida, 30 percent of working households spend more than one-half of their income on housing cost and California tops the list of five states with nearly one third or 32%.
Not surprisingly, Florida, along with California, were home to all of the top five most burdened metropolitan areas. In the Miami-Fort Lauderdale–Pompano Beach area, 39 percent of working households were severely burdened in 2008, while in the Orlando-Kissimmee area, the figure was 33 percent. In California, the metropolitan areas were: Riverside-San Bernardino-Ontario (36 percent), Los Angeles-Long Beach-Santa Ana (35 percent), San Diego-Carlsbad-San Marcos (35 percent).
Consistent with the study’s findings, the share of severely cost burdened working households increased significantly between 2005 and 2008 in 12 metropolitan areas. Severe burdens increased by more than 5 percent in Orlando, from 24% to 33%. The share of cost burdened working households also increased in the Tampa–St. Petersburg–Clearwater area from 22 percent in 2005 to 26 percent in 2008.
The study noted that one of the main reasons why declines in home prices have not improved housing affordability is that most home owners have not moved since the foreclosure crisis started and as a result have not benefited from the lower prices. Other reasons why housing affordability has worsened include: utility costs that have grown at more than double the rate of inflation, increasing housing payments due to adjustable-rate mortgages resetting, and an unemployment rate that began trending up in the last year of the time period studied.
“Despite the fiscal crisis, there is a pressing need to prioritize policies and programs that reduce housing costs, such as financial incentives for energy-efficient home improvements, mortgage modification programs and federal housing vouchers”, said Jeffrey Lubell, executive director of the Center for Housing Policy.
