CHICAGO – More Americans are becoming house-poor.
It’s an ugly downside of the soaring real estate market: Many of those who put a toe in the housing water are finding themselves unable to afford more than the basic necessities, unless they try to survive with a credit-card lifestyle.
“Americans are in over their heads when it comes to debt,” said economist A. Gary Shilling. “The value of real estate assets has zoomed, but people are borrowing more and more against their homes.”
A brief layoff or other job interruption can be enough to push many young homebuyers over the financial edge to insolvency.
Huge house payments are a direct reason for sky-high levels of bankruptcy and foreclosures. In some parts of the country, notably in California, the cost of housing can consume 60 percent of a household’s budget.
In the Chicago area, a study by Washington-based Fannie Mae Foundation finds about 11 percent of buyers are “severely cost-burdened,” meaning they pay 50 percent or more of monthly pretax income for housing.
For this complete story, please visit Housing Boom is Bust for Many Consumers.
