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Posted by drydem on May 4, 2008, 4:37 am
wrote:
> Can you support your points below, or are you just throwing out you opinio=
n?
>
Oh no!
I hope you don't think I'm ranting... (9_9)
My points are an empircal observation. I'm involved in
urban planning and local governing affairs
I occassionally testify at government hearings as well....
Locally builders have been able to opt out of building
affordable housing units ( until recently) by paying into
Affordable housing Fund. Developers could make much
more money by just opting out of building affording
housing units. However, the fund generated by this opt out
fee has never been enough for the local government to build
any new affordable housing projects/complexes ( especially with
rising land prices and higher construction cost). Since new
affordable housing units are now even more costlier to make
than in the past -- builders when they do make them also
can only make a few of them. Thus there hasn't been much
in additional affordable housing construction in my county
for about 20 years. Only recently the law was revised such that
builder/developers are now required to build Moderatedly Priced
Dwelling Units (MPDUs) and may NOT opt out -- but since
new construction permits has gone bust - this might
be a case of closing the barn door after the cows
have left.
At the local level, I've also witnessed
residents from local communities resist the inclusion
of MPDUs near their communities because they fear it would
decrease the value of their homes.
The lack of new affordable housing construction would not be
such a severe problem if it weren't for the lost of current
affordable
housing. The currently the bulk of affordable housing consist
of local apartment complexes but the current housing/real estate trend
has been of the conversion of these apartments ( which have
affordable rents) to luxury condos (which require a large amount of
capital but have high monthy fees) . So you not only have the
failure to create an adequate supply of new affordable housing
units but you have the lost of existing affordable housing units.
Luxury condos provide a higher profit margin than affordable
co-ops - So Co-ops are not very popular here. One of the
initiatives being advocated recently here is to stop the loss
of older affordable housing units by using the affordable housing
fund to buying apartments that provide affordable housing units
that would otherwise be converted into condoniums.
While housing cost have dropped - they are still very high
especially when considering the interest being charge
on the mortgage. It seems to me that the people
who have (re)financed their homes in my region in
the last 3 years who are mainly at risk with respect
to this currently troubling financial climate. I've heard
that atleast some of the current troubles have to do
with loans generated by mortgage brokers and
the lack of verification( of financial data by) financial
institutions. The main reason for this financial subterfuge
is to make a mortgage/home affordable (or appear to
be more affordable ).
I've notice in my community that most of the
housing assistance has gone to single parent families,
e.g. a mom with atleast one child. I've also notice that
many households in my locale ( the Washington DC
Metro Areas ) often solve the demand for higher
housing cost by having multiple earners.
>
>
> > The REAL housing crisis is that TOO MANY of them are being built every
> > day, bad mortgages or not.
>
> I disagree.
>
> It's not how many
> but what type of housing.
> It's part of a built in =A0market inefficiency
> There are plenty of houses for the very rich.
> However, there are very few options for the working poor.
> Because there is a higher profit to be made making housing for the
> very rich
> =A0 all the builders made houses for the very rich.
> Because there is a very low propfit for making housing for the working
> poor
> =A0 all the builders avoid making housing for the average working stiff.
> Unfortunately this led to a glut of overpriced homes
> =A0 =A0 because the world doesn't have =A0enough rich people
> =A0and a lack of affordable homes
> =A0 =A0 =A0for the average working family....
> this environment encourages/forces average family =A0into a
> =A0 =A0housing market where they must +buy up+ to afford housing
> =A0 often forcing them to extend their credit to buy a
> =A0 =A0 place to live...this inturn creates a financial market
> full of risky instruments. All it takes is inflationary pressures
> or a a recession to cause these risky instruments to fail
> en mass. -
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