Housing burdens spread unevenly

Census data show some hit harder

By Alan Zibel
Associated Press / January 19, 2009

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WASHINGTON - When it comes to homeownership, Hispanics in New Jersey, single parents in California, and senior citizens in Rhode Island all have something in common: More than a third have unaffordable mortgages.

Inequality in America has traditionally followed familiar patterns of race, age, and education. Those long-standing gaps have been magnified by the real estate boom and now the historic bust, according to an Associated Press analysis of 2007 Census Bureau data.

While minorities have made significant gains in wealth and home ownership since 1990, "things are going into reverse gear," and now the homeownership rate for blacks and Hispanics is falling, said Edward Wolff, a New York University economist who studies income and wealth distribution.

Nearly 9.5 million households, or nearly one out of every five of the nearly 52 million homeowners with a mortgage, spend 38 percent or more of their pretax income on their mortgage payment, property taxes, and insurance, according to the AP's analysis.

That's the new threshold to qualify for the loan assistance program launched last month by Fannie Mae and Freddie Mac, the mortgage finance companies now under government control.

Not surprisingly, the most financially burdened are in California, Florida, Nevada, and the Northeast, areas hardest hit by soaring home prices and now foreclosures.

Yet in every state, there are many pockets of homeowners who are just one unexpected medical bill or car repair from falling behind on their mortgages and setting the foreclosure clock ticking.

The AP's analysis reveals the enormous scope of the US housing market decline and how unevenly the burdens are spread, both geographically and demographically.

And the situation is worsening - a record 10 percent of US homeowners with a mortgage are at least one payment behind or were in foreclosure as of last fall, compared with 7.5 percent a year earlier and just under 6 percent in 2006.

The burden is clearly more arduous among minority households.

Just under a third of Hispanic homeowners spend at least 38 percent of their income on housing expenses, compared with about a quarter of Asian and black households and nearly 16 percent of white households.

In much of the country, the trend is more pronounced. For example, included among those who spent at least 38 percent of their income on housing are:

  • About 40 percent of black borrowers in Massachusetts, California, Nevada, and Oregon.

  • More than 30 percent of Asian borrowers in California and Florida.

  • Nearly half of Hispanic homeowners in Rhode Island and at least 40 percent in Alaska, California, Florida, Hawaii, Maryland, New Jersey, and New York.

  • The AP's analysis found that education level is highly correlated with income and mortgage expenses. Nearly one in three of those without a high school or college diploma spend at least 38 percent of their income on housing, compared with only 12 percent of those with advanced degrees.

    In addition, seniors spent a far higher share of their income on housing than any other age group.

    Among seniors with a mortgage, nearly three in 10 spend at least 38 percent of their income on housing, according to the AP analysis. The stress is most severe in: Massachusetts, California, Florida, New Jersey, New York, Rhode Island, Vermont, and Washington, D.C.