Housing Costing More For Families In U.s.

(As our housing market continues to slow, we are finding out some more troubling news about our real estate and property. )

A new study showed that every state in America, except Alaska, is spending more money on their housing costs than they did at the start of the decade in 2000.

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

This means that not only is our housing market cooling off, meaning less equity for virtually every homeowner across the nation, but it is now taking more of our yearly income to pay for our property.

There are a variety of factors that have contributed to this data and an October 3, 2006 article by The Associated Press and printed in The New York Times, "Housing taking a bigger bite of family budgets," explains the details behind the findings.

"Americans are becoming increasingly house-poor. Homeowners in every state but one spent more of their incomes on housing last year than at the start of the decade, data released Monday by the Census Bureau showed. Those in Alaska spent the same."

According to the data, homeowners spent 19 percent of their incomes on housing in 1999, and last year they spent 21 percent of their incomes on housing. This is up 3 percent from the beginning of the decade.

It is also no surprise that California is the state with the highest housing costs in the country.

"It ranked No. 1 in median home value, at $477,700; No. 2 in monthly housing costs for homeowners, at $1,912; and No. 2 in monthly costs for renters, at $973.Nearly half of California homeowners - 48% - spent more than 30% of their incomes on housing last year."

It seems as though Californians are really stretching themselves to be able to live in their homes. If they took out big mortgages, or "exotic" mortgages they could end up owing more than their homes is even worth.

If things get worse for the housing market, we are looking at a possible wave of foreclosures, where people cannot end up making their mortgage payments.

"'We really are reaching the outer edge of the envelope of what people can manage,' said Cynthia Kroll, senior regional economist at UC Berkeley."

Things are not only difficult for existing homeowners, but for people who want to get into a home as well.

"'It is now much more difficult for first-time home buyers 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,' he added."

The blame for housing taking a bigger bite out of income than in a past can probably be attributed to rising home prices and interest rates that reduce affordability. Also, home prices have risen, but people's incomes really haven't.

"America's homeownership rate is at a near-record 68.7%. But some housing advocates warn that declining affordability will make it difficult for low-income owners to keep their homes. For example, the government calls housing costs excessive if they top 30% of household income. Nationally, 34.5% of homeowners with a mortgage had housing costs that topped that benchmark in 2005. The rate was 26.7% in 1999."

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