Housing Costs, Rents, Rising

November 23, 2008

Housing costs, for homeowners and renters, are increasing at a rate substantially more than incomes are rising. Mortgage payments are just one element of rising costs, although they are the largest. A variety of other expenses are also rising, impacting all homeowners and renters. These rising costs affect new and longtime homeowners, households with and without mortgages, and renters.

Over the past decade, all major categories of household expenses have increased faster than incomes, according to a study and report by the Center of Housing Policy, the research affiliate of the National Housing Conference. Average mortgage payments increased 46 percent, utilities 43 percent, property taxes 66 percent, and property insurance 83 percent.

Rents also increased faster than incomes, rising by 51 percent. At the same time, renter incomes increased by only about 31 percent. Increasingly, families are finding it’s now more economically feasible to purchase a home than rent one. A growing share of total household income for most homeowners is, of course, is devoted to monthly principal and interest payments. It’s the largest housing expense for homeowners with mortgages, consuming more than a fifth of owner incomes. Those increasing mortgage payments, along with other owner costs, directly relates to rising rents.

Posted in Real Estate