Millions Spend Half Income on Housing

Now, more than any time in recent memory, Americans are spending more than 50 percent of their income on housing.

By: Henry Berkowitz More than 7.5 million people, nearly 15 percent of American mortgageholders, are spending at least half of their income on housing costs. The data, released last Tuesday by the U.S. Census Bureau, shows that the number of homeowners spending such a large portion of their income on housing is up from 7.1 million people the near before. In years past, the government and most lenders considered a customer who was spending at least 30 percent of their income on housing to be overburdened. However, that definition covers nearly 38 percent of all U.S. homeowners with a mortgage. Nearly 19 million people would have been considered overburdened by past standards. "We had a bubble," said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. "This is a case where we absolutely want the market to adjust." At the end of June, over 4 million U.S. homeowners were at least one month delinquent on their home loans. Nearly 500,000 had already begun the foreclosure process. This data, relased by the Mortgage Bankers Association, shows a drastic increase in the number of overburdened mortgage holders in the United States. In New England, affordable housing programs funded by the Federal Home Loan Bank of Boston awards low-interest loans to cities to encourage responsible home purchases for low to middle income households. The housing rescue plan, announced last week by President Bush, seeks to be the most comprehensive rescue plan for the financial industry since the Great Depression.