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Market Watch: How much income should you spend on homeownership? How to avoid being ‘house poor’

Market Watch, April 23, 2021, How much income should you spend on homeownership? How to avoid being ‘house poor’

Learn to budget for a home and repairs so you have some money left over.

Andy Hill discovered he was house poor soon after he bought his first home in 2004. When Hill put 10% down on the 1,200-square-foot house in Royal Oak, Michigan, a suburb outside of Detroit, he was surprised to find out he had to pay private mortgage insurance, which initially was $158 a month. Heating the poorly insulated home was also more expensive than Hill thought it would be. To make ends meet, the 22-year-old had to take out a home equity line of credit.

Saving 1% of the property’s value is a good starting point for maintenance expenses a year, says Ibijoke Akinbowale, director of the Housing Counseling Network at the National Community Reinvestment Coalition.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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