| More in state feel housing squeeze (Pioneer Press) |
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No surprise: Housing affordability in the Twin Cities dropped as home price tags soared during the boom. But new data underline just how much housing costs are hijacking homeowner finances. Nearly one-fifth of Twin Cities homeowners now spend more than 40 percent of their gross household income on housing, up from 9 percent of homeowners spending that much in 2000, according to U.S. Census data out today. Compared to cities such as San Francisco, the Twin Cities still has it good. But it's high for this area, as housing takes a bigger bite out of pay. The most widely-used affordability standard is about 30 percent - housing that requires more than 30-35 percent of the household's gross monthly income is generally considered unaffordable, unduly straining the pocketbook. The sharp increase is largely a function of wages not keeping pace with housing prices. Susan Haigh, president of Twin Cities Habitat for Humanity, said she was somewhat astonished by the rise and said it offers clues to the area's rising number of foreclosures. "This is a deeply troubling trend," Haigh said. Chip Halbach, executive director of the Minnesota Housing Partnership, agreed. Subprime lenders capitalized on the growing affordability gap, Halbach said, financing expensive mortgages for people with modest incomes. Spending more than 50 percent of household income on housing simply isn't sustainable, he said. "That to me is an indicator of foreclosures to come," he said. Said Tim Marx, head of the Minnesota Housing FinanceAgency: "When you're paying that much for housing - particularly if you are lower income - that really starts to have an impact on the resources you have available for food, transportation and health care and other life necessities." The squeeze gets worse when you fold in transportation, said Russ Adams, executive director of the Alliance For Metropolitan Stability, a community-advocacy group based in Minneapolis. The average Twin Cities household spends 17 percent of its income on transportation, or about $9,280 per year - $1,500 more than the U.S. average, Adams said. As a state, Minnesota now ranks No. 23 for unaffordable housing given that 34 percent of homeowners now pay more than 30 percent of their household income on housing. That's still below the national average of 37 percent of homeowners paying so much, but it's up significantly from 2000 when only 20 percent of Minnesota homeowners paid that much on housing costs. Back then, the state ranked a low 45th. California now ranks No. 1, with about half of homeowners paying more than 30 percent of their income for housing in 2006. North Dakota ranked last, at 23 percent. Wisconsin ranked No. 26 and was nearly identical to Minnesota. By Jennifer Bjorhus
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