Housing costs taking bigger bite

WASHINGTON — Americans are becoming increasingly house poor.

Homeowners in every state but one spent more of their incomes on housing costs last year than at the start of the decade, according to data released today by the Census Bureau. Those in Alaska spent the same.

Nationwide, homeowners spent nearly 21 percent of their incomes on housing costs last year, up from just under 19 percent in 1999.

In Utah, that cost went to 21.1 percent of income in 2005, up from 19.9 percent in 1999. But those numbers don't reflect the booming housing costs Utah has seen over the past year.

Salt Lake County single-family home prices rose nearly 21 percent over one year to a median price of $220,000 in the three months that ended June 30, according to a report, which tracks mostly existing homes, by the Salt Lake Board of Realtors and the Wasatch Front Regional Multiple Listing Service.

Nationally, housing analysts blamed surging home prices, higher interest rates and lower incomes for hurting affordability.

"It is now much more difficult for first-time homebuyers to get into the market and for existing homeowners to trade up," said Mark Zandi, chief economist at Moody's Economy.com. "This decline in affordability is the catalyst for the current sharp decline in housing activity."

The housing market has gone soft in many areas, but home prices are still much higher than they were at the start of the decade. Nationwide, median home values jumped 32 percent from 2000 to 2005, to $167,500.

Household incomes have not kept up, dropping 2.8 percent during the same period.

"Until incomes catch up, the housing market is going to remain flat," Zandi said.

America's home ownership rate is at a near-record 68.7 percent. But some housing advocates warn that declining affordability will make it difficult for low-income owners to keep their homes.

For example, the government says housing costs are excessive if they top 30 percent of household income. Nationally, 34.5 percent of homeowners with a mortgage had housing costs that topped that benchmark in 2005, an increase from 26.7 percent in 1999.

The percentage of homeowners exceeding the benchmark increased in every state but one during the period. In Hawaii, it stayed the same at 39.7 percent.

Housing costs are defined as mortgage payments, taxes, insurance and utilities.

"Families want to become homeowners, and they are willing to spend more to get there," said Jeffrey Lubell, executive director for the Center for Housing Policy, which advocates for affordable housing.

"But as they spend more and more, they are taking on mortgages that could put their homeownership at risk," Lubell said.