From the Record:
Despite the recent drop in home prices, one-third of New Jersey’s working households struggle with severe housing costs, the Center for Housing Policy said Thursday.
According to the Washington, D.C.-based center, 32 percent of working households faced severe housing cost burdens, defined as spending more than half of their incomes on housing. That’s up from 28 percent as recently as 2008, as the recession began.
Nationally, 23.6 percent of working households paid more than half of their incomes for housing in 2010, up from 21.8 percent in 2008.
To keep up with housing costs, “a lot of people are forgoing needs as well as wants,” said Laura Williams, author of the report “Housing Landscape 2012.”
“Maybe you buy fewer groceries, or don’t get new clothes,” Williams said.
While a big drop in home values has made buying a house more affordable, that was offset by a decline in household incomes from 2008 to 2010. It’s even worse for renters, who are being squeezed on both sides, as their incomes dropped 4 percent from 2008 to 2010, and rents rose 4 percent in the same period.
Demand for rentals has increased during the housing bust, as tougher credit standards made it more difficult for households to buy, and as many families lost their homes to foreclosure. But construction of new rentals has not kept up with demand, in part because lenders have been cautious about financing residential building.
“There are two sides to housing affordability,” said Arnold Cohen of the Housing and Community Development Network of New Jersey. “One is what people are earning, and we know what’s happening with that picture, and the second is what’s available. … For a certain population of people, we need to look at how government can help, because the private market is not doing it.”
The Center for Housing Policy report defines working households as those with a household income of no more than 120 percent of the area’s median income. About half of the state experienced a “significant” decrease in affordability for working households between 2008 and 2010, the report said.