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HUD Tracks Housing Cost Trends

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By Angela Carter

RISMEDIA, August 21, 2008-(MCT)-Over 20 years, median housing costs have risen 128%, from $348 per month to $793, while the proportion of household income spent on housing went from 19% to 22% in the same period, according to a report by the U.S. Department of Housing and Urban Development.

The report, “Trends in Housing Costs: 1985-2005 and the 30-Percent-of-Income Standard,” examined national cost trends from 1985 to 2005 for renters, homeowners with a mortgage and owners without a mortgage.

Monthly housing costs for owners with mortgages increased from $670 in 1985 to $1,521 in 2005, or 127%.

Payments to principal and interest on mortgages represented about two-thirds of monthly housing costs for owners with mortgages.

The second-highest cost was utilities, with electricity contributing the most expense, followed by gas.

For owners without mortgages, the highest housing costs were utilities, with real estate taxes running second highest.

HUD has long applied an affordability standard to federally subsidized housing units that caps the renter’s portion of housing costs to 30% of their annual income.

Researchers found that, in general, low-income households of $33,412 per year, very low income households of $24,668 a year, and extremely low-income households of $9,905 per year exceeded the 30% standard and were in danger of not having enough to meet other minimum needs.

Households with incomes within the range of “moderate”-$42,067 per year-to “extremely high” income-$127,730 a year-spent less than 30% of their earnings on housing and had more left over to consume other goods.

HUD spokesman Brian Sullivan said the department periodically studies how the standard and other funding formulas are performing.

For example, HUD also regularly reviews its funding formulas for the Community Development Block Grant program, which helps transform and stabilize communities.

“We keep watching these standards to see if they’re getting money to where it’s needed,” Sullivan said.

If the housing affordability standard were lowered to 25%, for example, without additional money allocated by Congress to make up the difference, HUD would not be able to help as many families, he said.

Copyright © 2008, New Haven Register, Conn.
Distributed by McClatchy-Tribune Information Services.

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