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Are housing costs rising as home market prices fall?

The roller-coaster ride in the economy continues to generate media reports of just about every aspect of finance that may affect American consumers. This blog has recently discussed a variety of stories that may affect Ohio residents.

Certainly, since the bottom fell out of the economy, many Ohio residents have found a new landscape when it comes to making ends meet. Home mortgage foreclosures hit Ohio hard, but other issues have also led to financial stress in many Cincinnati area households.

Many people in Ohio who have not faced foreclosure have seen a drop on housing prices that have resulted in underwater mortgages. After a foreclosure, many other consumers have been forced to renting after losing the home. In the meantime, the media has continued to report that home mortgage interest rates and prices of homes on the market are relatively low, suggesting a sort of market attractiveness for home buyers.

But what is the actual cost of housing that Americans face in today's economy?

The Joint Center for Housing Studies at Harvard University released a new study Thursday that suggests the cost of housing may be at record levels for Americans. The study found that 20.2 million American households forked over more than half of their household incomes in 2010 to pay for housing. That is a record level. It is also a 13 percent jump from 2007, and a 46 percent increase from levels recorded in 2001.

The brunt of increased housing costs falls more predominantly on renters than on homeowners. The study found that 27 percent of all renters in America spent more than half their incomes on rent each month in 2010. However, many homeowners, especially those with an underwater mortgage, were in a similar situation. The number of homeowners who paid more than half of their monthly incomes to keep the roofs over their heads increased by more than 350,000 between 2007 and 2010.

The study authors pretty much stated the obvious when they wrote, "For households paying large shares of income for housing, making ends meet is a daily challenge."

Source: Huffington Post, "Housing Costs: Record Number Of Households Spending More Than Half Of Income On Housing," Bonnie Kavoussi, June 13, 2012

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