Income stagnant and poverty up in Washington state

By Rebecca Cook
The Associated Press

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Incomes were up, poverty was down and the housing market was on fire.

Two recent U.S. Census surveys released Thursday show just how much has changed in the past few years. Income is stagnant, poverty is up and the housing market — well, that's still on fire.

As a result, renters and homeowners are getting burned. Between 2000 and 2003, the data show, Washington residents became much more likely to spend more than 35 percent of their income on rent or mortgage — and most experts say that's too much.

"If higher-income households chose to spend that much of their income, that's a choice they're making. It becomes a problem when renters have to spend more," said Glenn Crellin, director of the Washington Center for Real Estate Research in Pullman. "That housing cost is going to be coming out of food and medicine and other basic needs."

Despite the economic downturn, which hit Washington state especially hard, low interest rates kept the housing market hot. The median home value in the state rose above $200,000 for the first time last year, according to the Census Bureau's American Community Survey.

The sizzling housing market is not just a Seattle thing. The most recent data from this spring shows the housing market hit record highs in all 39 Washington counties, Crellin said.

Though mortgage rates have begun to creep up, Crellin said the slowly improving economy is encouraging people to buy homes.

"Those people who were sitting on the sidelines last year, concerned the overall economy was not strong enough ... they're coming into the market this year," he said.

More people are buying, and more people are struggling.

In 2000, about 34 percent of renters spent more than 35 percent of their income on rent — that increased to 40 percent in 2003, according to the American Community Survey.
 
Among homeowners, 22 percent spent more than 35 percent of their income to pay the mortgage in 2000 — last year it went up to 26 percent.

Washington was among 10 states with the biggest percentages of households spending more than 35 percent of their income on rent or mortgage, right up there with California and New York.

A separate survey the Census Bureau released last week, the Current Population Survey, showed that more Washingtonians are losing health insurance and falling into poverty. Between 2001 and 2003, the survey says, about 14.3 percent of Washington residents lacked health insurance and 11.4 percent lived in poverty.

The trend will continue as long as Washington continues to lose family-wage jobs and replace them with low-paid service jobs, said Aiko Schaefer, director of the Statewide Poverty Action Network.

"The increasing costs of housing, child care and health care are really putting the squeeze on families," she said.

Gretchen Bruce sees the problem up close. As director of Homelessness Prevention Programs at the Fremont Public Association in Seattle, she tries to help people in financial crisis keep their homes or apartments. She hesitated even to mention the agency's rental-assistance program, because the demand is so overwhelming.

The program focuses on one-time help for people who temporarily can't pay rent. The agency used to screen out clients who paid more than half their income on rent, figuring they needed more than temporary help. But too many people were screened out, so the threshold recently increased to 75 percent.

"People used to call us when they were two months behind on the mortgage, but they had a job interview coming up," Bruce said. "Now what's happening is people are coming in further behind, they've gone through their savings, and they don't have job prospects. We're able to save fewer and fewer."

Three years ago, Bruce said, 37 percent of the people coming to her program needed help because they'd lost their job or had their wages cut. Now it's 57 percent. She's often amazed that people manage to feed and clothe their families when they spend three-quarters of their income on rent or mortgage.

"They really have to get creative," she said.