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Number Of America’s Working Families Spending More Than Half Their Income On Housing Grows 76 Percent, New Study Finds

May 3, 2005

In just over half a decade the number of America’s working families paying more than 50 percent of their income for housing has grown 76 percent, according to a new study released today entitled The Housing Landscape for America’s Working Families 2005 [PDF 2.6M ] , conducted by the Center for Housing Policy, the research affiliate of the National Housing Conference (NHC). Specifically, in 1997 2.4 million working families spent more than half their income on housing, but by 2003 this number had grown dramatically to 4.2 million. This comprehensive study also compares immigrant working families to their native-born counterparts and reveals that immigrant working families are 75 percent more likely to pay more than half their income for housing. Working families are defined as low- to moderate-income families that work the equivalent of a full-time job and earn from the minimum wage of $10,700 and up to 120 percent of the median income in their area. Freddie Mac, one of the nation’s largest investors in residential mortgages, funded the study.

This study focuses on working families that had critical housing needs between 1997 and 2003, and was released at an Affordable Housing Forum in Los Angeles sponsored by Century Housing, Freddie Mac and the NHC.

One of every 8, or 14.1 million of all families had critical housing needs in 2003 – that means they paid more than half their income for housing, and/or lived in physically dilapidated conditions. A total of 5 million of these families are low- to moderate-income working families. In addition, 6 out of 10 immigrant working families with critical housing needs are Hispanic and one-third are from Mexico.

A severe cost burden is the reason why almost 85 percent of working families had critical housing needs while the other 15 percent were living in physically dilapidated conditions.

"These new findings help shed light on a troubling trend across America – working a full-time job does not guarantee families a decent, affordable place to live," said Barbara Lipman, research director for the Center for Housing Policy. "In fact, the housing problems of working families are more persistent and pervasive than many experts may have thought, and are not only confined to cities, renters, or the East and West coasts."

"It’s vital for the public and private sectors to work together on this issue that affects one of the country’s greatest sources of strength – working families," said Bob Tsien, senior vice president of Freddie Mac. "Affordable housing needs to be addressed nationwide for both renters and homeowners. Every family, regardless of income, should have the opportunity to live in decent, affordable housing."

Owning vs. Renting

In 1997 the number of working families with critical housing needs was split roughly 50-50 between owners and renters at 51 percent of homeowners and 48 percent of renters. However, by 2003 the number of homeowners with critical housing needs reached 55 percent and the number of renters with these needs was lower at 45 percent.

In addition, most homeowner and renter working families with critical housing needs were paying more than half their income for housing, but homeowners were more likely to face this problem than renters at almost 9 out of 10 versus 8 out of 10 respectively. Affordability does, however, account for a growing share of critical needs among renters. For example, in 1997, affordability was the problem for approximately 71 percent of renters with critical housing needs, and the problem grew steadily to 79 percent in 2003. Working family renters with critical housing needs were more than twice as likely as their homeowner counterparts to live in dilapidated conditions.

Suburbs vs. Central Cities

When comparing suburbs to central cities, most homeowners with critical housing needs lived in the suburbs, and 1 out of 4 lived in central cities. For renters, more than half lived in central cities, 4 out of 10 lived in suburban areas, and less than 1 out of 10 lived in non-metropolitan localities.

A total of 42 percent of all working families with critical housing needs lived in the suburbs in 2003. This compares to about 39 percent of working families with critical housing needs that lived in central cities – dispelling a popular myth that families with these needs are primarily found in cities. Approximately 20 percent, or 1 in 5, resided in non-metropolitan areas.

Regional Data

By region, the data reveals that the highest incidences of critical housing needs are found in the West and Northeast. However, despite slight declines between 2001 and 2003 in the South and Midwest, all four regions have seen substantial growth in critical needs since 1997.

Crowding, although it has remained relatively stable for working families since 1997, is highest in the West where in 2003 working families were two to three and one-half times more likely as working families in other regions to live in housing with more than one person per room.

Immigrant vs. Native-Born

From the total number of working families with critical housing needs, the new study also compares native-born and immigrant families. According to the data, immigrant working families are 75 percent more likely than their native-born counterparts to pay more than half their income for housing. A total of 15 percent of immigrant working families, compared to 8 percent of native-born families, pay more than half their income for housing.

Also, contrary to conventional wisdom, it is not only recent immigrant arrivals that experience housing problems. Of the low- to moderate-income immigrant working families with critical housing needs more than 50 percent arrived in the United States before 1990, demonstrating that critical housing needs decline little, if at all, with the length of time immigrant families have lived in the U.S. This compares to 25 percent of immigrants that arrived between 1990 and 1996 and 23 percent that arrived after 1996.

The critical housing needs of working families are greater for immigrants than for native-born in all regions. The disparity is especially large in the Northeast, where immigrants have almost one and one-half times the rate of critical housing needs than native-born. In terms of crowding, rates decline little, if at all, with the length of time immigrant working families have lived in the United States. In addition, at just under 25 percent, Mexicans are much more likely to be crowded than other immigrant groups, followed at some distance by other Latin Americans, at less than 12 percent. Crowding is highest in the West where 1 in 5 immigrant working families are affected.

Affordable Housing Forum

At today’s Affordable Housing Forum in Los Angeles sponsored by Freddie Mac, Century Housing and the NHC, experts discussed the significance of these findings and solutions for helping to ensure decent, affordable housing for all Americans.

"We are bringing together housing experts to learn about the study, and to discuss their experiences and strategies for the affordable housing crisis in America," Tsien added. "This report and forum are steps in the right direction toward solving the housing needs in communities nationwide."

"The startling data in this report highlights the need for financial institutions and all levels of government to address the growing disparity between the cost of housing and the incomes of workers and their families," said NHC Chairman G. Allan Kingston, president and CEO of Century Housing. "Public agencies and the private sector must work hand-in-hand to make use of new financial tools, local land-use incentives, and regulatory reforms to build more housing. Unless we continue to invest in housing affordable for our workforce, our economic future is at risk."

The Housing Landscape for America’s Working Families 2005 combines and updates the Center’s previous work, which over the last five years has helped to detail the critical housing needs of working families nationwide.

Source: The Center for Housing Policy / National Housing Conference



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