Housing costs take bigger chunk of paychecks, study shows

By Genaro C. Armas
Associated Press

WASHINGTON — Many more low- and moderate-income working families are spending at least half their salaries on rent or mortgages, according to a study released this week by affordable housing advocates.

More than 4 million households fell into that category last year, a 67 percent increase in four years. The surge is because of increases in housing prices outstripping wages, said the Center for Housing Policy and its parent organization, the National Housing Conference. The result is many people must cut spending elsewhere, such as retirement savings, researchers said.

Pedro Aguilar, 37, his wife and their two teenage daughters moved from San Francisco two years ago because housing prices had become unaffordable. They moved to Antioch, Calif., about an hour away, but now find themselves again struggling to pay the rent.

Aguilar, a janitor, and his wife make about $3,000 a month. They pay $1,500-a-month for a three-bedroom apartment, but their rent is set to increase by $300 next month. Aguilar said his yearly raises of 40 cents an hour don't cover the rising housing costs.

Previously released government statistics show that the median household income rose about 14 percent between 1997 and 2001 to $42,228, while the median price of a new home rose 20 percent to roughly $175,200. The median rent for the last three months of 2001 was about $535, up more than 17 percent from the same period in 1997. The figures were not adjusted for inflation.

Jared Bernstein, an economist at the Economic Policy Institute, a think-tank, said if the economy continues to falter while housing prices remain high, more people will have to devote greater portions of their income to rents and mortgages.

"If families couldn't keep pace with housing costs even in the best of times, this problem will only get worse unless we find a way out of this jobless recovery," Bernstein said.

The study found there were nearly 14.4 million low- and moderate-income families, regardless of working status, with critical housing needs, including retirees and those who make less than minimum wage. That figure was up from 13.1 million in 1999.

Most of that increase — nearly 1 million — came among families who worked the equivalent of a full-time job and made more than minimum wage.