Mortgage bills aren't the only housing costs crimping budgets

MarketWatch (MCT) - Much attention has been given to homeowners struggling to make their mortgage payments but other household costs are also hammering both homeowners and renters alike, according to the Center for Housing Policy.

All major categories of homeowner expenses increased faster than incomes between 1996 and 2006, the center reported in "Stretched Thin: The Impact of Rising Housing Expenses on America's Owners and Renters."

While mortgage payments increased 46 percent during those 10 years, utilities increased 43 percent, property taxes increased 66 percent and property insurance increased 83 percent, according to the study. But homeowner incomes increased just about 36 percent.

Renters weren't better off: Rents increased by 51 percent during the period, but renter incomes increased about 31 percent. Landlords are facing some of the increased costs that homeowners are, including higher insurance costs, and are passing on the increases through higher rents, said Maya Brennan, co-author of the report, which was released Oct. 8.

Given the rising costs of heating oil, natural gas and gasoline since 2006, families likely have stretched their household budgets even more in the past couple of years, the center reported.

The Center for Housing Policy is the research affiliate of the Washington-based National Housing Conference, a nonpartisan advocacy organization for national policies and legislation that promote housing in a safe, decent environment, according to its Web site.

"The mortgage crisis is a huge issue that needs a lot of attention," Brennan said.

But there's a bundle of housing costs that Americans are having trouble with, she added. "Politicians need to look at this entire bundle and see if this is affordable."

Many strapped homeowners would likely argue that it's not.

On average, housing expenses _ including rent or mortgage payments and the cost of utilities, property taxes, insurance and maintenance _ went up by $5,314, or 65 percent, during the 10 years examined in the study. By comparison, food costs rose by $1,413, or 30 percent, and transportation costs rose by $2,126, or 33 percent, and health-care costs rose $996, or 56 percent, according to the report.

The report broke down some of the expenses taking the biggest bites out of household budgets:

_ Natural gas and heating oil. Heating-oil prices increased 131 percent between 1996 and 2006, from $1.05 to $2.43 per gallon; the cost jumped another 52 percent to $3.69 per gallon in 2008. Natural gas prices went from $6.34 per thousand cubic feet in 1996 to $13.75 in 2006; prices increased to $14.30 in 2008.

_ Transportation. Gas prices nearly tripled in the last six years, going from $1.38 a gallon in 2002 to $4.05 a gallon in 2008. Prices have dropped more recently, Brennan noted, but are still up substantially when compared with several years ago.

_ Mortgage principal and interest payments. From 1995 to 2005, mortgage principal and interest payments increased almost 46 percent. The figures don't fully reflect increased costs associated with adjustable-rate mortgage resets, which are still continuing.

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_ Property taxes. On average, tax bills increased nearly 66 percent between 1996 and 2006 _ less than half of the 137 percent rise in average home values. But many jurisdictions limit rates of growth in property-value assessments, a reason that tax bills in some areas may still continue to rise.

_ Property insurance. The average cost of homeowner insurance rose almost 83 percent between 1995 and 2005, a result of disaster risks and increases in construction costs, the cost of repairs and the increase in mortgage amounts. Recent disasters, including Hurricane Katrina, flooding in the Midwest and fires in California, caused large losses, and premiums may increase as a result.

Since it's a bundle of household costs that consumers are struggling with, there needs to be a bundle of solutions to address the problems, Brennan said.

"To get the American economy back on its feet, we will need to look comprehensively at helping Americans afford the full 'costs of place,' which include the costs of shelter, utilities and transportation," said Center for Housing Policy chairman John McIlwain, a senior resident fellow at the Urban Land Institute, in a news release.

The group is recommending a systematic approach to making buildings more energy efficient to ease rising energy costs. It also recommends incentives for more affordable housing near mass transit and job centers, and increased investment in public transit.

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