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Management Analysis

Cost Burden

Why this is important
The number of cost-burdened households (paying more than 30% of income on housing costs) is an important measure of housing affordability. Households that are cost-burdened (especially those that are severely cost-burdened, paying 50% or more of gross monthly income for housing) can find themselves struggling to pay for other basic necessities such as food, clothing, and transportation. According to the Wilder Foundation, these families may drop health care coverage, select less expensive child care arrangements, or skip meals to save on costs.

What the data show
In 2011, Dakota and Carver Counties had the lowest level of cost-burdened households with a mortgage in the metropolitan area (30% and 29.3%, respectively).  Levels of cost burden among different household types have increased slightly over the past decade. The percentage of cost-burdened households without a mortgage has doubled between 2001 (7%) and 2011 (14%). 

Renters are more likely to be considered cost-burdened for housing than those who own their own home. In 2011, almost half of the household renters in Dakota County spent more than 30% of their income on housing and related costs, an increase of four percent from 2010.  According to a Dakota County Community Development Agency Survey report, an annual income of about $49,000 is necessary to afford an average three-bedroom apartment in Dakota County. This is an hourly rate of about $24, which is a significantly higher wage than many Dakota County residents and workers earn. 

Background
Being cost-burdened means a household contributes 30% or more of their gross monthly income to housing expenses, including rent, mortgage, taxes, utilities and association fees.  Data on cost burden comes from the Wilder Foundation’s Twin Cities Compass and the American Community Survey.

Last updated: 9/3/2013 9:17 AM