Everything seems to be getting more expensive these days and claiming a larger share of the average worker's take-home pay. Gas, clothes, airline tickets and even ice cream … prices just keep going up while income remains mostly flat. So where does housing stack up? Well, that depends on where you live.
In some states like Maine, 3.3% more of its homeowners were spending more than 30% of their income on housing in 2012 than they were in 2005. In California, the opposite occurred. Nearly 40% of Californian homeowners were paying 30% or more for housing each month in 2012. That's roughly 250,000 fewer homeowners or a 2% decline since 2005.
Why? Well, house prices have come down significantly from their peaks, while at the same time, mortgage rates hit record lows in this time period. For existing owners, this sparked a massive refinance boom over the past four years, allowing them to reduce their monthly housing cost burden by thousands of dollars a year. Texas experienced an even larger decline (3.2%) in the share of homeowners shelling out more than 30% for monthly housing expenses. However, where California lost over 280,000 homeowners, Texas gained over 400,000 over that seven-year period.
Conversely, when we look at renters, we see an almost unilateral increase in the cost burden. In fact, in just two states, North Dakota and Texas, did renters get a break, not because rents came down but because incomes in these states rose. However, 8% more renters were spending more than a third of their budget on housing in Wyoming – that’s nearly 9,000 households.
Read other Did You Know? posts in our series to celebrate National Homeownership Month.
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