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Housing Bubble? Nah. Housing Crisis? You Bet

By
Real Estate Agent with eXp Realty of California, Inc. CA DRE #01490977

I have always been sensitive to housing issues, perhaps because of my experiences in other careers (my corporate roles, prior work at the New England Medical Center in Boston), places I have lived and traveled, my reading, people I have associated with, and more recently as a real estate professional. After reading several articles recently, and thinking more about the housing market we have experienced in the last few years, it seemed appropriate, if not necessary, to comment on the housing issues facing this country, and our individual communities. And to talk about what can be done, and IS being done, by many of us.

Just a couple of examples of the problem. The housing affordability index in California, according to C.A.R. is 24% - only 24% of people in the state can afford the median priced home, and individual indexes in many communities go far lower (where I am in San Diego County, 21 towns recently had a reported index of less than 10%).

A recent report issued by the Center for Housing Policy and NHC (National Housing Conference) found some pretty disturbing statistics - health care workers are priced out of the median price home in the majority of 200 metropolitan areas in the country. But the problem is not just homeownership, but the ability to afford to rent even a 1-bedroom apartment in the majority of metro areas. I could go on and on, citing other reports with similar dismal data. But I suspect the problem is far more serious than these various reports show. And  of course there are there is the housing crisis brought on by natural disasters such as Katrina. We are all acutely aware of these issues in our respective communities and a number of you have written about them;  see Roberta Lee's recent post The Rich Get Richer...my interest is in what is being done, and not done, to address these issues.

 Affordable housing in CalrsbadMany areas I have lived in provide affordable housing including Carlsbad(yes, the word "affordable" is, perhaps, a misnomer). As an example, in Cambridge, MA, 10% of every new condo complex had to be designated for affordable housing as determined by city statistics on low and medium income levels. Lotteries were used to determine who, of those who met the income criteria and loan requirements, could purchase these properties; there were other restrictions as well.

We are all aware of the Federal subsidized housing program through HUD called Section 8 to assist low income individuals and familes nationally. Carlsbad, where I am now, has a number of apartment complexes that are either partially designated for this program, or entire complexes which are "affordable."

 And every major city has numerous shelters (e.g., Rosie's Place in Boston) and programs dedicated to assisting the homeless, a far more insidious problem facing our communities, and one which many try to ignore or pretend does not exist.

I am proud of the fact that, while in Cambridge, I was a member of the Cambridge Council of REALTORS, who were very involved in housing issues for renters. The housing organization called CHAF was founded in 1999. The Cambridge Housing Assistance Fund provides rental assistance to low income earners and the homeless in the community through subsidies for apartment depositsrentals; many community organizations and individuals are now part of a citywide coalition - the banking community, Harvard University, small businesses, private citizens. An annual fundraiser sponsored by the Cambridge Council of REALTORS raises over $175K each year to assist hundreds of families. This is just one way that critical housing issues are being addressed.

Are we doing enough? Absolutely not. But perhaps this sort of thing is being done elsewhere; it certainly could be a model for other communities. And I suspect many of you are aware of and/or participating in similar programs, or are dedicated in other ways to assisting those with these types of housing issues. Let's hear about them!

Posted by

Jeff Dowler, CRS
Certified Residential Specialist / Realtor®


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Tony and Suzanne Marriott, Associate Brokers
Serving the Greater Phoenix and Scottsdale Metropolitan Area - Scottsdale, AZ
Haven Express @ Keller Williams Arizona Realty
This type of pricing situation resulted in many single family homes in London being converted to multiple "flats" (apartments).  Not sure what the UK equivalent of "zoning" is.
Jan 11, 2007 08:29 AM
Anonymous
Mikey
I wanted to correct my comment "1.8% of people can afford to buy in the Los Angeles MSA", they say that 1.8% of houses in the Los Angeles MSA are affordable for those families at the median income.
Jan 11, 2007 08:38 AM
#12
Roberta Lee
Century 21 Olde Tyme - Norco, CA
Norco Corona Riversid Homes For Sale

Dear Jeff,

Thanks for a great blog.  Insight is so very important, but few people use it.  Oh there are many reasons for that, but most of all is that we are blinded by our own lives and the many tidbits on our own plates.  Nobody likes to admit this so we cover up this very unpleasant view of ourselves with all kinds of excuses.  One of which, in my opinion, is, "these (those) people" deserve what they have gotten. Then they list all of the reasons why "these people" have gone wrong.

The sad but true thing is that in amongst "these" people are just what you said, policemen, firemen, teachers, nurses and many more that just don't make enough to afford "affordable" housing to buy.  They are of course faced with the decision to move to an area where homes are less expensive but maybe they also have to give up their professions.  And we certainly need them all.

Thank you for helping us to open our eyes to some very undesirable traits that afflict us all, one of which is, "not being able to read the writing on the wall."

Roberta Lee

Century 21 Olde Tyme, NOrco, CA

Jan 11, 2007 08:57 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Lenn - I work in a similar area (median prices range from $535K in the least expensive town to $2.5M in the most expensive. And , yes, people DO make quite a fuss about affordable housing - the NIMBY approach.

Roberta - Thanks for your commentary.

Mikey - yep, that IS a problem with the index, and I am always suspicious of these sorts fo things, BUT they doo at least provide a general picture of the seriousness of the problem.

Interesting point, Tony. When I lived in Cambridge, MA, a number of years ago the housing market went nuts there adn becuase it got so expensive a huge number of multifamily properties overnight turned into condos that were VERY affordable. but that quickly changed. Now they are as expsnive as detached homes in many areas.

Colleen - thanks for stopping by. And I suspect there are many other areas in Florida with the same problem.

Joan and The Harper Team - appreciate your comments. I did see Jeff Turner's post the other day.

Jan 11, 2007 11:49 AM
John Klassen
M & T Bank - Kingston, NY

I love all the government and agency statistics.

Figures lie and liars figure. Reality is what people in those areas have to do to make it.

Love the post.

Jan 11, 2007 11:53 AM
Carole Cohen
Howard Hanna Cleveland City Office - Cleveland, OH
Realtor, ePRO
I agree about the MPDU's - it's a concept that could be adopted everywhere. 24% is unbelievably sad Jeff. And thank goodness for shelters, but that's not ultimately where people want to hang their hats.
Jan 11, 2007 12:42 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Jeff, I have to dig up the info on this but about two years ago HUD was allowing people with Section 8 vultures to use a significant part of their voucher towards the purchase of a house.  This did not work because it was another one of those HUD great idea's that they did more to look good than to actually make it work.  It was another case of allowing money to be used without guaranteeing it.  I will not go into the details of it here, but may be I will write a Post on this next week, as to why it has failed to do what it was suppose to do.

Jan 11, 2007 12:53 PM
Kay Van Kampen
RE/MAX Broker, RE/MAX - Springfield, MO
Realtor®, Springfield Mo Real Estate

Great post, Jeff.  I just added you as a featured post.  Thank You for great information.

 

Jan 11, 2007 01:57 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Thank you, Kay. It is such a tough issue and I think we need to be reminded regularly.

George - would love to hear about that. Thanks for your comment.

John, Carole - thank you for your kind words.

Jan 11, 2007 02:08 PM
Kaye Thomas
Real Estate West - Manhattan Beach, CA
e-PRO, Manhattan Beach CA
Another excellent post Jeff.. Here in the South Bay(Manhattan, Hermosa nad Redondo Beach).. even condos aren't inexpensive.. we really have no affordable housing per se.. rentals are also very expensive.. the parts of town that are more affordable ( 3 bedroom townhome $400,000-$450,000) are usually located in areas of very high crime.  I don't know what the answer is but CA really needs to give the issue some heavy thought.. especially as we now have between 36,000,000 ot 37,000,000 People (depending on which census you use Ca or US Gov't).  Wouldn't it be nice if they adked a few REALTORS® for some answers instead of another bureaucrat... just s thought..
Jan 11, 2007 06:04 PM
Jeff Turner
RealSatisfied - Santa Clarita, CA
Jeff :: This is exceptional information. Thank you for sharing it. As a fellow Californian, I think about this constantly. I don't know what the answers are, but I know that some of them will need to come from the real estate community itself. 
Jan 11, 2007 06:26 PM
Netta Blackwood
La Rosa Realty - Kissimmee, FL
REO/BPO Expert
Extremely good topic Jeff, I agree that we all need to do more.
Jan 11, 2007 09:28 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Kaye - yep, it's pretty scary when you really consider the facts. And as agents we get bogged down in looking at prices from the persepctive of the buyers we are working with, but not thos making minimum wage or not much more who haven't a prayer of owning a home here.

Jeff T- I am honored, Jeff. Thanks for your comment. One of the things that really hits home for me are my 2 daughters, one living in LA. She is 26, making very good money and would like to buy. She can probably afford $350K but wonders if she can actually get something to live in that is livable (her words) in an area where she feels safe. In many parts of the country this is a 4 BR house. So what chance do people who make $20K, $30K or $40K have here? And I don't know the anwsers either.

THanks, Netta. I appreciate your thoughts.

Jan 12, 2007 01:06 AM
Kelley Eling
Fathom Realty Group - Sonoma, CA
Realtor Extraordinaire

Check out what we've got going on in our neck of the woods:

The lowest (asking) price of anything currently available on MLS in Marin County is $425K.  It's not even habitable.  In fact, the listing doesn't even show any pictures of the home, just the lot (.25 acres +/-) and it is in a remote coastal town with little or no employment opportunities anywhere nearby.  Certainly nothing that would pay the mortgage and taxes. 

Next up is a 606sf 1 bedroom 1 bath bungalow, on a 2747sf lot, right in the middle of the County Seat (San Rafael).  They are asking $529K.  At least now they are.  It's been on the market for 107 days, reduced from $559K.  This same home sold on 10/28/03 for $412K and was marketed as a fixer/tear down.  I can see no visible improvements to the property. 

The third home is a 703sf, 2 bedroom, 1 bath home on a 2597sf lot, on a very busy not-so-safe street.  Asking $535K, 116 days on the market and no price reductions. 

The prices just go up from there.

It boggles the mind.

Jan 12, 2007 04:08 AM
Roberta Lee
Century 21 Olde Tyme - Norco, CA
Norco Corona Riversid Homes For Sale

Dear Kelly,

Yep, you live in California.  We have on our MLS a listing which the individual agent chose to put in residential instead of land there is NO house. Here is the listing more or less. I'm paraphrasing .  1 bath. Lot ½ acre. $385,000.00.  Now before all of you tell me what a great deal this is, as you know getting a construction loan is not easy, so this is a listing for someone with the means to build for self, an investment. Not for a first time home buyer that needs a place.  This has been on the market for 251 days. Dah!  Yes, California has to go back to the drawing board and fix this problem.

I am hoping that I can help in this by working with a program I'm coming up with.  I'll let you all know how it goes. Thanks to Jeff he got me of my bottom and thinking of how to part of the solution and the problem.

Roberta "Dove" Lee

Century 21 Olde Tyme, Norco, CA

Jan 12, 2007 05:22 AM
Kaye Thomas
Real Estate West - Manhattan Beach, CA
e-PRO, Manhattan Beach CA
Roberta and Kelly... In Manhattan Beach the least expensive listing is a 2 /2 townhome listed at $789,000. In Hermosa there is a 1/1 598 sqft condo for $479,000. Buildable lots run from $800,000-$9,400,000 ( recent sale for tear down on the Strand)
Jan 12, 2007 08:19 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Yikes, Kelly. Wonder what percent of the folks in your area can afford to buy anything!

Kaye - I love MB and wish I bought years about when I first fell in love and could afford it. Now, forget it...BTW we love the Local Yolk! I get up to LA often (my older daughter is there). We should get together to chat....

Roberta - keep us posted. This is only something that will worsen. I am thinking about what CHAF did in my old home town and maybe I need to get something similar started here!! It scares me - do I have the time?

Jan 12, 2007 11:43 AM
Anonymous
Jeff Belonger

Jeff D.... I am not 100% up on this and any idea surrounding it. Lauren talked about affordable housing in Texas. I think part of it has to deal with the states... but also some organization that would subsidize builders...making new construction affrodable.  Other than that.....  new mortgage programs. But even someone making $60,000 in my area, what can they truly afford?  People need to pay attention to those courses and classes that give down payment assistance.....grants, etc etc. There are so many out there. I think part of the issue is that people don't want to spend the time to receive that money....  shame on them. Why not?  For a 6 week course?  Maybe a 10 week course?   LAZY also...

So....with that said.... why should some people be helped?  You need to want it.....  not just given to you. Hey... I believe in helping people... but so many don't make the effort to receive this help. They just wanted it handed to them. I see it more often than it is talked about. Just my 2 cents...

Jan 12, 2007 03:24 PM
#28
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Jeff D.... I am not 100% up on this and any idea surrounding it. Lauren talked about affordable housing in Texas. I think part of it has to deal with the states... but also some organization that would subsidize builders...making new construction affrodable.  Other than that.....  new mortgage programs. But even someone making $60,000 in my area, what can they truly afford?  People need to pay attention to those courses and classes that give down payment assistance.....grants, etc etc. There are so many out there. I think part of the issue is that people don't want to spend the time to receive that money....  shame on them. Why not?  For a 6 week course?  Maybe a 10 week course?   LAZY also...

So....with that said.... why should some people be helped?  You need to want it.....  not just given to you. Hey... I believe in helping people... but so many don't make the effort to receive this help. They just wanted it handed to them. I see it more often than it is talked about. Just my 2 cents...

Jan 12, 2007 03:25 PM
Kaye Thomas
Real Estate West - Manhattan Beach, CA
e-PRO, Manhattan Beach CA

Jeff... You have my info call next time you make the Yolk..or Sloopy's...   Would be great to get together..

K

Jan 12, 2007 03:31 PM