In 2005, the median income rose 1.2% for the first time in nearly 10 years to an average of $46,326. This number was below the 1999 amount of $47,671. These numbers are reported by the U.S. Census Bureau. Not everyone realized a gain in their income. Households with total incomes of $92,000 or greater saw an increase, these households make up the top 20%.
Energy Spending
Home heating, gasoline, and electricity are all going up in price, causing household energy spending to jump a total of 7% between the years of 2000 and 2005. During the decade of the 1990's, energy costs rose a mere 1.4% An increase of 9.2% is expected to be seen this year compared to last year. Consumers spent a total of $547 billion on energy in 2005 and are expected to pay $560 billion in 2007.
ARMs Force Ownership Costs Up
Housing costs continue to eat up a larger portion of personal income. The top 5 states which have highest housing costs as a percent to household income in the year 2005 were: Nevada, New Jersey, Florida, Hawaii and California.
California, Arizona and Nevada are states where the greatest increases in housing costs are expected due largely in part to the number of ARMs that have been taken out by home owners in these states.
In Nevada alone ARMs accounted for only 10% of mortgages in 2001. In 2005, that number was up to 45.6% Washington, D.C., Arizona and California have all seen increases greater than 20% in the number of ARMs taken out by home buyers. Owners in these states are currently at a significant risk for bankruptcies or defaults on their loans.
36% of home owners that have taken out adjustable rate mortgages are concerned that increasing interest rates could adversely affect their ability to afford their monthly payments. 84% of prospective home buyers take rising interest rates into concern, while only 1/3 of home buyers state that they would consider an ARM.
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