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Americans are Paying More Than They Can Afford
A Census Bureau report indicates that an increasing amount of American homeowners are paying more than they can afford for housing costs.
(PRWEB) October 6, 2006 -- A Census Bureau report indicates that an increasing amount of American homeowners are paying more than they can afford for housing costs.
According to the Census Bureau's American Community Survey, homeowners are buying homes that they cannot afford.
Most analysts say that 30% of a household's income is the limit for housing costs -- including principal, interest, insurance and taxes.
However, approximately 34.5% of mortgage holders were paying over 30% of their gross income towards their housing costs.
Five years ago, only 26.6% of homeowners were paying 30% or more.
Median home values rose 32% between 2000 and 2005. This triggered not only a rise in the usage of home equity loans, but it also increased the monthly cost of owning a home by 5% on a national level.
Los Angeles saw the largest increase in median home values at 110.2%.
The affordability issue is only complicated by the addition to rising interest rates on loans that have adjusted this year. Many homeowners have found that costs are well exceeding their payment capabilities. Defaults and foreclosures are expected to continue to rise, according to industry analysts.
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