This article was published on: 10/3/2006

Burdened': Area owners pay a big chunk of their income for housing

By Michele R. Marcucci and Eve Mitchell
MediaNews

A higher percentage of Bay Area homeowners are stretching to afford a home here than in most of the rest of the country, new census figures released today show.

Nearly two-thirds of Hayward's homeowners were paying more than 30 percent of their income for housing in 2005, the data from the American Community Survey shows, as were more than half who owned homes in Richmond, Daly City, Vallejo and Oakland. More than one in 10 Hayward homeowners has a second mortgage, the data shows.

Only South Gate, Calif., and Newark, N.J., outranked Hayward on the list of those paying 30 percent or more of their income for housing in cities of 65,000 or greater, though the margins of error for the data could shuffle the cities' ranks.

In San Jose, 48.7 percent of those who owned their residences -- the Census Bureau includes homes, condominiums, mobile homes or any other mortgaged residence -- were paying more than 30 percent of their income on housing. Statewide, that number is 47.7 percent. Nationally, 34.5 percent were paying that much, the figures show.

Even wealthy Bay Area homeowners are affected: In Pleasanton, which the Census Bureau recently ranked as having the wealthiest households among cities of 65,000 or more, nearly 43 percent of homeowners were paying what the federal government considers too much for their housing.

Families who pay more than 30 percent of their income on housing are considered ''cost burdened'' by the federal government and may have difficulty paying for necessities including food, clothing, transportation and medical care, according to the U.S. Department of Housing and Urban Development.

California's homeowners also topped the list of who pays the most for their housing. Redwood City ranked behind three Southern California cities, with homeowners paying an average of $2,851 a month for housing in 2005, including mortgage, taxes, insurance, utilities and fees.

Lenders and other home buying experts said they're not surprised by the numbers, which they said reflect a long-running trend in the Bay Area. And some questioned whether the 30 percent figure was outdated, saying many people can afford to pay more.

But the high prices -- driven by limited home supply and low interest rates that made it easier for people to borrow -- have made it tough for first-time home buyers. The cities where the percentage of homeowners paying more of their income for housing is highest are the places where many first-time buyers ended up, lenders said.

''Every single one of my clients fits that bill,'' said Dianne Crosby, senior loan consultant with the Oakland office of LaSalle Financial Services.

Michael Singer bought into a duplex in Oakland in March 2005, his first home purchase. The research scientist said he pays more than 30 percent of his income for his home, and that it affects his overall budget. His home costs leave him no extra money for savings.

''It's pretty tight,'' Singer said.

Lenders and real estate experts said home buyers in the Bay Area are used to paying more for housing than home buyers elsewhere, and that many, like Singer, use their homes as a savings plan. Most have figured out how to manage the extra debt, they said. In some cases, borrowers are making smaller down payments than previous generations of home buyers.

''(They) are going to make the lifestyle change necessary to own a home, which may mean that 50 percent of their income goes to their mortgage. . . . (They) don't go out to dinner, they don't go shopping anymore. It's about changing their lifestyle, ''said Andrea Lanier, a mortgage broker with the San Mateo office of Bankers Preferred Real Estate Loans.