Working families with children are finding it harder than ever to own their homes, according to a study released Wednesday by the Center for Housing Policy.
The rate of homeownership for low- and moderate-income families fell below 1978 figures, even though nearly 70 percent of Americans own their homes, the group found.
In Colorado, 74 percent of residents own their homes, said Kathi Williams, director of the state’s Division of Housing.
“But we still continue to be very concerned about the price range of housing we have available – the supply of affordable housing,” she said.
The national trend is driven by a combination of factors: higher health-care bills, a rise in the number of single parents and soaring housing costs that have outpaced wage increases.
Minority working families have struggled the most. Their homeownership rate has stagnated at 45 percent, far below white families (71 percent) as of 2003, the last year for which figures are available.
The problem is not lack of shelter but that people in certain income brackets are paying more for housing than they can afford, Williams said.
“We have some of the highest foreclosure numbers in this state since the 1980s,” she said. “We feel we’ve gotten some folks into homeownership that is above their ability to pay, and now we’re going to have to deal with foreclosure prevention.”
They’re also commuting farther.
Many people can’t afford to live near their workplace, said Andy Wallace, co-founder and chief executive of FrontierLiving, a Denver homebuilder that specializes in entry-level housing. They might work in the southeast Denver metropolitan area to earn a higher income, for example, but live in northern suburbs where they can afford to buy a home, Wallace said.
“They’re sacrificing via commute to make affordability happen,” he said.
The effects are being felt in communities where teachers, police and firefighters can’t afford to buy homes where they work.
The median home price in Denver – half cost more, half less – is $232,000. To qualify for a loan to buy that home, a potential buyer would need to earn at least $73,574 a year, according to the Center for Housing Policy.
A Weld County police officer earning $38,979 a year can afford a $135,000 house – based on mortgage guidelines that limit housing payments to 30 percent of income. The median cost of a home in the area is $185,168, however.
A Mesa County cop can afford $137,000, yet the median home price there is $151,344.
The drop in homeownership rates for working families carries repercussions for their children, too.
Studies have shown that children of homeowners are more likely to perform well in school and are less likely to have behavior problems, said Barbara Lipman of the Center for Housing Policy. That’s the research arm of the National Housing Conference, a housing-affordability advocacy group.
Though her researchers lacked access to census data after 2003, Lipman says the trend seems to have persisted.
Homeownership for working families is highest in the Midwest, followed by the South, the Northeast and the West.
The study highlights a shortage of affordable homes.
“There are government-assistance programs, but they have a diminishing influence on the housing market,” says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University.
A problem, Retsinas says, is that “the labor market in our economy produces lots of low- wage jobs. There is an incredible disconnect between the housing market and the labor market.”
USA Today writer Nolle Knox contributed to this report.
Staff writer Margaret Jackson can be reached at 303-820-1473 or mjackson@denverpost.com.
