Where Does That Paycheck Go? A Lot of It Goes to Housing, Study Says

Almost half of renters in the Birmingham-Hoover metro area spend more than 30 percent of their income on housing costs, a state that a recent report from Harvard University classifies as cost-burdened.

More than a quarter, 27.7 percent, spent more than half of their income on housing, according to the State of the Nation’s Housing report from 2017. Those people are considered severely cost-burdened.

The numbers are fairly close to national averages, according to the report. Nationally, 48 percent of renters spend more than 30 percent of their incomes on housing, compared to the Birmingham area’s 45.9 percent, and 26 percent spend more than half.

The report, issued by Harvard’s Joint Center for Housing Studies, said the housing market is returning to normal after values plummeted during the Great Recession. Nationally, home prices rose by 32 percent between 2000 and 2016. But the study said lower-income areas are seeing improvement much more slowly.

The Birmingham-Hoover metro area is one of those places. Home values here are down 1.2 percent since 2000 and down 17.1 percent since housing valuations hit their peak in October 2006.

Nationally, the rebound has been a double-edged sword – good for homeowners but driving up costs for renters, the report found.

Another quandary is that the recession, along with an aging population, have driven more people into the rental market, but construction of rental housing has not kept pace.

Among findings reported in the study:

  • 21.7 percent of homeowners in the metro area pay more than 30 percent of their income toward housing costs, much lower than the 48 percent who do nationally.
  • 9.3 percent of homeowners in the metro area spend more than half their income on housing costs. Nationally that number is 26 percent.
  • 62 percent of households overall in the metro area can afford to pay the typical monthly payments on median-priced single-family houses, which locally is about $1,080. Nationally, only 59 percent of households can afford to pay the typical monthly payments for their metro areas.
  • 40 percent of renters in the metro area could afford to pay the typical monthly payments on a house, nearly the same as the 39 percent found nationally.

“Access to affordable, accessible and safe housing is critical to the health and well-being of all households, and particularly the most vulnerable – the very young and very old, those with disabilities and those living in poverty. But with rents rising, there is growing demand for housing assistance at the same time that government budgets are shrinking,” the report concluded.

The report recommends changing regulations that might restrict construction of affordable housing and providing more subsidies to help people with extremely low income find affordable housing.

Explore interactive maps and other online data tools posted with the report.