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ADMINISTRATIVE REVIEW DRAFT Housing Affordability and Overpayment The U.S. Department of Housing and Urban Development has defined "affordable" housing as housing which requires no more than 30 percent of a household's gross monthly income, including the cost of rent or mortgage payments, homeowner's fees, and utilities. For instance, the "affordable" rent for a two person household with an annual income of $40,000 would be $1,000 a month (including utilities). That household would be defined as "overpaying" for housing if their monthly rent exceeded $1,000. As one might expect given the high cost of housing in the Bay Area, the number of households "overpaying" in the region is significant. Table 3-10 provides 1990 Census data on "overpayment" in San Leandro. The table indicates that 30.4 percent of all San Leandro households paid more than 30 percent of their income on housing, with renters more heavily impacted than homeowners. More than 40 percent of all renters paid in excess of 30 percent of their incomes on housing. Although current data on overpayment is unavailable, housing costs in the City increased at a much faster rate than personal income during the 1990s, undoubtedly leading to a larger incidence of overpayment. Lower income households are more likely to overpay for housing than other households. In San Leandro, this is particularly true among lower income renters. In 1990, 93 percent of the 3,479 renter households with incomes less than $20,000 paid more than 30 percent of their income for housing. Even among renters with incomes between $20,000 and $35,000, 41 percent paid more than 30 percent of their income on housing. The incidence of overpayment is smaller among lower income homeowners than it is among renters. In 1990, only a third of the City's homeowners with incomes of less than $20,000 paid 30 percent or more of their income for housing. Two-thirds of the households in the $20,000435,000 income bracket spent less than 20 percent of their annual income on housing. The figures suggest that many San Leandro residents purchased their homes before the rapid inflation of home prices during the 1980s and 90s. In fact, 40 percent of San Leandro's homeowners had paid off their mortgages in 1990. Although these households are not burdened by high monthly housing costs, they may still have a difficult time with home repair and maintenance expenses and property taxes. Table 3-10: Overpayment for Housing in San Leandro, 1990 Percentage of Household Income Spent on Housing Costs Renters Percent of Total Owners Percent of Total Less than 25 percent 5,365 41.5 % 10,237 67.4 % 25-29 percent 1,611 13.3 % 1,424 9.4 % 30-34 percent 1,091 9.0 % 931 6.1 % 35 percent or more 3,757 31.1 % 2,521 16.6 % Not Computed 246 2.0% 91 0.6 % TOTAL 12,070 100.0 % 15,204 100.0 % Source. 1990 Census HOUSING ELEMENT 3-12 SAN LEANDRO GENERAL PLAN 41�