CT Housing Burden Worsens, Eclipsing Nation, Most States

December 22, 2009 -- Despite the drop in home prices fueled by the foreclosure crisis, Connecticut and 12 other states saw the number of low- to moderate-income households burdened by their housing costs jump markedly between 2005 and 2008. Of Connecticut's 574,233 households making 120% of median income or less, 127,380 or about 22% were spending more than half their income on housing.

The increase of "severely burdened" households from 18% of the total in 2005, was the fifth highest increase after Delaware, Hawaii, Maine and Maryland and eclipsed both the 21% national total and the national increase from 20% over the period.

The data, contained in a new Center for Housing Policy report released last week, shows that housing affordability has actually worsened for America’s families. The report, entitled Housing Affordability Trends for Working Households, examines the relative affordability of housing for low- and moderate-income working owners and renters between 2005 and 2008.

One of the main reasons why home price declines have not improved housing affordability, the study says, is that most homeowners have not moved since the foreclosure crisis started and, as a result, have not benefitted from the lower prices. 

Other reasons why housing affordability has worsened include:

• utility costs that have grown at more than double the rate of inflation,
• increasing housing payments due to adjustable-rate mortgages resetting, and
• an unemployment rate that began trending up in the last year of the time period studied.

“More than 20 percent of low- to moderate-income working households spend at least half their income on housing – and double-digit unemployment rates in many states are threatening to push more of America’s families into financial instability,” said Jeffrey Lubell, executive director of the Center for Housing Policy.

“Despite the fiscal crisis, there is a pressing need to prioritize policies and programs that reduce housing costs, such as financial incentives for energy-efficient home improvements, mortgage modification programs and federal housing vouchers.”