Tuesday, March 21, 2006

Mortgages in LA Cost Half Income For Over 25%

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** Corrections Made (thank you to readers who pointed out errors)

A Christian Science Monitor analysis says a collapse of the real estate boom would first harm "low-income minorities and immigrants in a big U.S. city like Boston."

The story looks at a rise in foreclosures and a drop in housing prices. Although the story's focus is Boston's mortgage-holders, it turns out LA is in the same boat.

Both cities have large numbers of residents who are stretched thin with each month's mortgage payment. The story says a quarter of them forks over at least half their income to pay for housing.

Spending any more than 25 percent of your income on housing is generally considered too much.

The story is based on an analysis of census figures from 2004, so you know that the reality may be worse once 2005 is factored in.

Here's an excerpt:
... Other Bostonians are under similar pressures. Fully 27.1 percent of the city's homeowners with a mortgage spent at least half their gross income on housing in 2004, according to the latest census figures available. Those costs, which include utilities and insurance as well as mortgage payments, were more than double the national rate of 11.7 percent and topped New York (25.9 percent), Los Angeles (26.5), San Francisco (20.4), and Chicago (20.3). Of the 25 biggest cities, only Miami had a higher rate (35.8 percent).

— The Boy in the Big Housing Bubble