Magazine article American Banker

Hard Times Ahead for Low-Income Homeowners

Magazine article American Banker

Hard Times Ahead for Low-Income Homeowners

Article excerpt

The problems of lower-income homeowners are likely to grow worse in the 21st century, according to a new report by the Joint Center for Housing Studies of Harvard University.

Homeowners at or near the poverty level spend more than half of their incomes on housing-related expenses, including meeting mortgage payments and real estate taxes, the report said.

With the government offering little assistance, the burden of solving the problem is falling to the private sector and assorted nonprofit groups, the report concluded.

The number of lower-income homeowners is expected to grow to 28.5 million in 2010 from 22 million in 1995, according to the report. With this growth, home repair and improvement needs will exceed government aid and private-sector assistance.

Lower-income homeowners cannot afford basic upkeep of their homes or the renovations necessary to accommodate elderly or disabled members of a family, the report said.

The "banker's rule-of-thumb" says buyers should spend less than 30% of their income on housing. Almost 10 million lower-income homeowners spend more than that, and over half spend more than 50%, the report said.

It also found that the vast majority of homeowners with incomes that were less than 30% of the median for their area were spending more than the suggested 30% of income.

With low-income homeowners unable to make home repairs because of financial constraints, more than 1.7 million live in "physically inadequate units" and over 500,000 live in "severely inadequate" homes. …

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