Who isn't Stretched?

"In just over half a decade the number of America’s working families paying more than 50 percent of their income for housing has grown 76 percent, according to a new study released today entitled The Housing Landscape for America’s Working Families 2005, conducted by the Center for Housing Policy, the research affiliate of the National Housing Conference (NHC). Specifically, in 1997 2.4 million working families spent more than half their income on housing, but by 2003 this number had grown dramatically to 4.2 million."

"One of every 8, or 14.1 million of all families had critical housing needs in 2003 – that means they paid more than half their income for housing, and/or lived in physically dilapidated conditions."

"Owning vs. Renting
In 1997 the number of working families with critical housing needs was split roughly 50-50 between owners and renters at 51 percent of homeowners and 48 percent of renters. However, by 2003 the number of homeowners with critical housing needs reached 55 percent and the number of renters with these needs was lower at 45 percent."

"Suburbs vs. Central Cities
When comparing suburbs to central cities, most homeowners with critical housing needs lived in the suburbs, and 1 out of 4 lived in central cities. For renters, more than half lived in central cities, 4 out of 10 lived in suburban areas, and less than 1 out of 10 lived in non-metropolitan localities."

"A total of 42 percent of all working families with critical housing needs lived in the suburbs in 2003. This compares to about 39 percent of working families with critical housing needs that lived in central cities – dispelling a popular myth that families with these needs are primarily found in cities."

"Regional Data
By region, the data reveals that the highest incidences of critical housing needs are found in the West and Northeast."

"The irony of today's housing market is that while fundamentals are supporting record levels in residential investments, housing affordability problems are climbing the income scale," said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies.

The center found that nearly one in three American households spends more than 30 percent of income on housing, and more than one in eight spend upwards of 50 percent."

"These "house-poor" Californians have been a significant contributor to the state's housing boom, according to a study by the Public Policy Institute of California, a Bay Area nonprofit think tank."

"More Californians are stretching their finances to afford the state's ever-more-expensive homes, with 20 percent of recent home buyers plowing more than half their monthly income into their mortgages."

"It concludes that many recent buyers aren't rich newcomers but moderate-income thirtysomethings who are accepting hefty mortgage payments to get into the market."

"The percentage of recent California home buyers spending half their monthly income on housing is twice the national average, said Hans Johnson, who co-authored the study."

"1 out of every 5 recent California homebuyers is spending 50 percent or more of his or her income on housing costs -- twice the national average."

"Ever wonder how anyone can afford a house in the Bay Area these days?
Here's one way: Lenders are assuming that borrowers can devote an ever-growing percentage of their income to house payments."

"Bay Area home buyers with good credit ratings can qualify for loans that will require them to devote 40 to 50 percent of their gross income (not net, mind you) to housing and other debt payments. Some mortgage brokers have completed loans where debt repayment represented 60 to 75 percent of the borrower's gross income."

``I've been able, with a big enough down payment and a good enough credit score, to do a loan with a debt-to-income ratio of 75 percent,'' says Margaret Ashwell, a mortgage broker with Pacific Guarantee in San Francisco.

Housing affordability in Marin County and in the BayArea as a whole has become an increasingly importantissue.

It is estimated that one-third of all households currently residing in Novato are paying more than 30 percent of their income on housing.

It is estimated that 41% of all households currentlyresiding in San Anselmo are paying more than 30% of their income on housing.

One in ten families in San Mateo County spend more than half of their income on housing.

More than one-quarter of Boston's mortgage-holders appear to be stretched thin financially, spending at least half their income on housing, according to an analysis of census figures. That's more than twice the national average and the highest of any major city except Miami.

"Fully 27.1 percent of the city's homeowners with a mortgage spent at least half their gross income on housing in 2004, according to the latest census figures available.

Those costs, which include utilities and insurance as well as mortgage payments, were more than double the national rate of 11.7 percent and topped:

New York (25.9 percent)
Los Angeles (26.5)
San Francisco (20.4)
Chicago (20.3)

Of the 25 biggest cities, only Miami had a higher rate (35.8 percent)."

Are you wondering where the Sonoma/Sonoma County statistics are for how much of the population is paying more than 30% of their income on housing costs?

Yes... me too. Actually, unless it is just well hidden or not released to the public... the last study in Sonoma County was back in 1998. Back when the housing affordability was MUCH higher. Now we are at a situation where Sonoma County has about the lowest affordability in the state of California.

Fewer than 7% of households... that is combined household income can afford to by a home. However, Sonoma County has been very proud of its housing boom since 2000. SO... what does that tell you? Those who bought the homes, likely could not afford them by traditional measurement standards. Therefore it is pretty reasonable to conclude that at least the average number of Californians who overleveraged themselves into homes, probably applies to Sonoma County.

I suspect the ratio of % of households spending more than 50% of their income on housing costs in Sonoma County is probably higher than the state average. But even if it is only 20% of recent home buyers since 2000 who are overleveraged above 50%... that is a pretty big number for such a small county.