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More Milwaukeeans vulnerable to soaring housing costs, UWM study shows
by: Laura L. Hunt
Home ownership in Milwaukee County increased between 2000 and 2006. Though that may seem like good news, a new study by the Employment and Training Institute (ETI) at the University of Wisconsin–Milwaukee indicates that more households are stretching the limits of what they can afford for housing.
And for many of those, high-interest mortgages and other escalating housing costs – such as taxes, utilities and mortgage values – are to blame.
In fact, the percentage of highly leveraged households with mortgage payments amounting to half of their income or more nearly doubled in the City of Milwaukee in the same six-year period (from 10 percent in 2000 to 19 percent in 2006).
In one year alone – 2005 to 2006 – high-interest rate mortgages rose 35 percent in the county.
The standard set by the U.S. Department of Housing and Urban Development (HUD) for affordable housing is that no more than 30 percent of household income should be spent on housing-related costs.
Yet, homeowners in the City of Milwaukee spending less than 30 percent of their income on housing dropped from 73 percent of those with a mortgage in 2000 to 57 percent in 2006, according to the study.
The report, supported by Legal Action of Wisconsin, used recently released American Community Survey census data and Home Mortgage Disclosure Act data to assess the impact of the national housing crisis on low-income homeowners and renters in Milwaukee County. The ETI is also working with the Predatory Lending/Foreclosure Prevention Task Force, convened by the local HUD office, to help develop strategies for dealing with fallout from subprime mortgage lending in Wisconsin.
Renters also hit
Increases in housing costs have affected both homeowners with mortgages as well as renters. Nearly a third (31 percent) of renting households in the city reported spending at least half of their income on housing in 2006, up from 21 percent in 2000.
Among the Midwest’s 10 largest cities, says John Pawasarat, ETI director, Milwaukee ranked second for the percentage of its renters spending at least half their income on housing. (Detroit ranked first.)
The report found disparities in race and location.
African Americans were much more likely to get high-cost loans than whites, and two times more likely to get refinancing loans. And homeowners in the poorest areas were the mostly likely to have high-cost mortgages.
The number and dollar amounts of mortgage borrowing activity in Milwaukee’s poorest ZIP code, 53206, were at an all-time high, with 75 percent of the loans either subprime or high-interest-rate, up from 65 percent just two years ago.
Renters on public assistance were particularly vulnerable.
The percentage of city renters on public assistance who had affordable housing, based on the HUD standard, dropped from 38 percent in 2000 to 20 percent by 2006, according to census data.
At the same time, property tax bills in the central city increased by 62 percent on average for duplexes and 50 percent for four-bedroom houses.
For the full report and other information go to http://www.uwm.edu/Dept/ETI/2007/Housing.htm.
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