Housing-Stress Indicator

Financial advisers warn against spending more than 30% of a household’s income on housing costs, as it can crimp other expenditures and savings. It also leaves little room for unexpected shocks to income, such as illness or unemployment. Miami was at the top because it had the highest percentage of mortgage holders spending more than 30% on housing among large metro areas — 57.7% compared to the national average of 37.5%. At the same time, a quarter of the city’s residents are without health insurance — compared to the national average of 15% — making it difficult to deal with a the expense created by an illness and still pay a mortgage.

The problems also can feed on one another. A housing bust can lead to unemployment as construction and other real-estate related jobs dry up, which then pushes more people into foreclosure.

Comment: Sortable list from the Wall Street Journal


  1. Hey JP. I have always heard the 30% rule, but it just occurred to me, what all should be put under that 30%? Obviously the mortgage, but should things like a monthly maintenance budget, if one has one? What about utilities?

  2. Keep in mind that some of these "rules" do not really have a Biblical world view. Most investment books for example never consider giving first to the Lord through one's church.

    Perhaps the better way of considering housing is TCO (Total Cost of Ownership) that would include taxes, utilities, yard maintenance, etc.

  3. It's worth noting that those who are truly wealthy--as opposed to those who are simply showing off--spend far less than 30% on their home. Given the reality of 30-40% value drops even in the suburbs (I've seen evidence of 75% or so in the inner city), the relevant questions seem to be:

    1. How much home do you really need?
    2. How much can you afford to lose?
    3. Wouldn't it be better to have productive investments (stocks, bonds, real estate, etc..) rather than idle ones?

    My family has downsized quite a bit as we moved to Waseca, and it's a wonderful blessing to see how little we actually need. Not that our home is a pit, but sometimes....ya just don't need as much as your eyes tell you ya do.

  4. I completely agree. I actually sent an email to my wife a few weeks back (so she could read on her own) that 30% is considered the max, although it is much wiser, or at least thriftier to spend much less. I did a bunch of math to show how much you spend in interest if you spend 30% compared to something lower. Unfortunately, I don't think many people are shown those numbers.

  5. Interesting map...is it happenstance (or my own bias) that the red areas on this map correspond closely to the blue areas on most election maps?


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