Mortgages rising a lot faster than paychecks

It's the latest in a line of improvement projects the couple have worked on "constantly" since buying their fixer-upper two years ago, Meegan Atkins said.

"It was in our price range," she explained.

The percentage of Seattle residents who, like the Atkinses, own their homes increased over the past five years -- even though home values and mortgage payments rose much faster than incomes, data the U.S. Census Bureau released today shows.

According to Census numbers, the trend in Seattle also was true in the county, state and nation, although the chasm between income and home values widened more in the city.

Local economists said low interest rates were the biggest reason more people were able to buy their own homes between 2000 and 2005. They also worried about what the trend might mean for coming years.

During that period, "we got home ownership levels nationwide really at record highs, to a point where I'm not sure it's sustainable," said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University.

Randy Bannecker, a consultant housing specialist for the Seattle-King County Association of Realtors, pointed to interest rates and innovative mortgages, such as those with no money down, adjustable rates and interest-only payments.

The Atkinses, for instance, took out a zero-down, adjustable-rate mortgage to buy their house in 2004. They already have enough equity to refinance and shed their mortgage-insurance payment.

Bannecker also noted the boom in construction of new condominiums and townhouses.

"That, for the Seattle market, is relatively new," he said. "Typically, those have been more affordable than a single-family, detached home."

Crellin said some people bought earlier than they planned, to avoid getting priced out of the market. Some who didn't buy during a similar period in the 1970s were shut out for a decade, he said.

Rachel Ernst and fiancé Tyler Sprague just started their home search, but have paid attention to prices for a lot longer.

"It's been discouraging to think we could have gotten in two years ago," Sprague said outside of a Crown Hill home they looked at Sunday.

Rob Chambliss and Jessica Burg, who also are engaged, checked out the same home, but had little hope of affording a house in Seattle.

"Everything's too expensive for us," Chambliss said. "It's just kind of a fantasy."

Then again, there are still those who see Seattle's prices as a relative bargain.

"The reason I moved here was I can't afford to live in California," said John McCallum, who was looking at homes with fiancée Anna Haglöf Sunday. "It's still half the price (here)."

The value of California's median home is more than double Washington's, while San Francisco's median home is worth nearly twice Seattle's.

Crellin expects nationwide homeownership rates to stagnate or even drift downward in the next several years.

"Obviously, we can't sustain the disparity between incomes and housing prices that we have at the present time," he said. "What I am expecting is prices are going to remain pretty much on a plateau for a period of time as incomes catch back up."

Bannecker expects the gulf between incomes and prices to put more pressure on suburban sprawl. "The desire is still there to own if at all possible and the supply in our major job centers -- Seattle and Bellevue -- is very small, particularly at an entry-level rate," he said. "So we find people traveling farther and farther to where they can afford something."

People like Ernst, Sprague, Chambliss and Burg hope to find something in the city, close to their jobs, and to shopping and other services. Bannecker said buyers are becoming more accepting of denser housing types -- such as townhouses and condos -- in areas with good schools, safe streets and nearby shopping.

NATIONAL HIGHS AND LOWS

Here are the highest and lowest cities for various home-related figures the U.S. Census Bureau released today, along with the national numbers. The information comes from surveys of residents of cities with at least 65,000 people. All numbers are medians.

Owner-occupied home value

Newport Beach, Calif.: $1 million

Reading, Pa.: $48,000

U.S.: $167,500

Household income

Pleasanton, Calif.: $101,022

Camden, N.J.: $18,007

U.S.: $46,242

Difference between housing cost and income

Santa Barbara, Calif.: $938,819

Odessa, Texas: $21,138

U.S.: $121,258