Housing bite getting bigger

When Kyle and Kelly Krosting bought their cozy suburban home three years ago, they spent about 40 percent of their paychecks on housing. But since Kelly Krosting lost her job this year, the South St. Paul couple has paid 75 percent of their monthly income for their home.

They're part of a disturbing trend.

One in nine Minnesota mortgage holders, or about 120,000, face housing costs that drain more than half of their income, according to a new analysis by the Minnesota Housing Partnership, a St. Paul-based housing research and advocacy group. That's up from one in 18 in 2002.

It's the biggest percentage of household spending that state housing officials can recall. And that doesn't count 111,000 renters.

"It's a tremendous increase, and when you combine the number of renters and homeowners who are severely cost-burdened, it's happening faster than in nearly all parts of the country,'' said Chip Halbach, executive director of the Minnesota Housing Partnership.

"For families earning less than $50,000 a year, how do you even handle it?'' he said. "There just isn't enough money to make ends meet, with increases in the cost of food, energy and gas.''

Bob Odman, an assistant commissioner at the Minnesota Housing Finance Agency, called the trend "a significant concern that needs more attention.''

"It's one more aspect of the housing crisis we're facing,'' Odman said, "and it has a ripple effect across Minnesota's economy. As people pay an ever-increasing portion of their income on housing, it leaves less money to purchase other basic necessities.''

The Krostings acknowledge that they've jumped off the consumer grid. A walk through their kitchen shows how they're getting by. The refrigerator freezer is stacked with one-pound chunks of venison wrapped in white paper -- part of a 50-pound stash donated by a friend.

The onions and potatoes near the kitchen sink are part of a 100-pound purchase from a farmer in northern Minnesota, split between the Krostings and Kyle's father for about $20 each. About 10 quarts of identical apple juice sit next to the refrigerator, thanks to a recent grocery store sale.

"They [financial counselors] tell most people to change their spending habits, but we're already not spending anything,'' said Kelly, 28, who had to close her daycare business after suffering an unexplained heart attack this year.

"We've had venison meatloaf this week, venison stroganoff, venison burgers -- and venison meatballs today,'' she said. "And guess what Mommy and Daddy are having for lunch tomorrow?'' she said she asked her two children while eating dinner this week. "More venison meatballs and spaghetti!''

Young homeowners such as the Kostings are among those particularly hard hit, said housing officials, as are senior citizens on a fixed income, workers with stagnant wages and Minnesotans facing personal crises such as divorce, job loss and health problems.

The federal definition of "affordable housing'' is housing that consumes less than 30 percent of a person's income. The American Community Survey, conducted by the U.S. Census Bureau, tracks this trend. The Minnesota analysis, by researcher Leigh Rosenberg, found:

• One in five households -- owners and renters -- in St. Paul and Minneapolis pay more than 50 percent of their paychecks for housing. In the suburbs, it's one in nine.

• About 36 percent of households -- both mortgage holders and renters -- in St. Paul and Minneapolis pay at least 30 percent of their incomes for housing. About 30 percent of suburban households do the same.

• More than half of all homeowners statewide who earn less than $50,000 a year pay more than 30 percent of their income for housing. That's more than 270,000 households.

"These people are under the radar,'' said Pamela McGowen, a program director at Community Action Partnership of Ramsey and Washington Counties. "They're not seeking services. They're using other ways to get by. They might get rid of a second car. They may sacrifice child care. A food shelf is a last resort.''

The Krostings said they've applied for some assistance but are usually turned down because Kyle's job in Internet sales and photography generates a little too much money. Nonetheless, they applied for heat assistance last week. And they're working with a financial counselor at Children's Home Society in St. Paul. The couple may sell an extra car.

These families don't have a ton of options right now, Halbach said. Some renters and elderly homeowners are applying for subsidized housing vouchers, he said. Many families are working with financial counselors to try to iron out new payment plans with their mortgage companies or at least consolidate debt. And a new federal housing act could offer relief to some financially strapped homeowners.

As for the Krostings, they're hoping Kelly can land a job that pays enough to cover day care. Until then, said Kelly Krosting, "we're taking one day at a time.''

Jean Hopfensperger • 651-298-1553