Affordable Housing

This editorial in the WP lays out the workforce housing situation quite well. One thing the author does not do is identify solutions, beyond calling for government subsidies.

Having done the math, Lerner, like other developers, feels little incentive to build large quantities of smaller, affordable units for which profit margins per unit are much slimmer and for which always-variable absorption rates must be much higher. Developers also know that affluent buyers are less affected by volatility in interest rates and employment.

According to MacGillis’s report, Lerner’s managing director of construction, Peter M. Rosen, offered a concise, unambiguous explanation of the developer’s thinking: “We respond to the market. The company would be willing to build more and smaller units if you guarantee the market.” Fairfax County, MacGillis reported, had envisioned another scenario but “wasn’t exact enough in its demands: It extracted an agreement only for a minimum number of residential square feet, not of housing units.”

Affordable housing is not an isolated issue. Across the country, communities are facing this crisis; solutions are elusive, as the free market tends to build to the widest market.

What type of subsidies would be effective? Build subsidized housing? That hasn’t worked. Force developers to build a certain percentage of “affordable housing”? Bah. The governments forte is neither economic development nor property management. I believe that the private sector must create a solution, as government’s inherent inefficiency and lack of integrity disqualifies it.

One of my goals this year was to write more about solutions than problems. I don’t feel bad saying that this issue confounds me.

Slashdot surprisingly has a commentary about affordable housing.

The problem for people who got to the game too late to get a house cheap is that it’s almost impossible for us to own homes. First and foremost you have the cost: Home prices AND rents have been spiraling ever higher, but wages have not. So while we are making money, what little we can save after paying outrageous rents hardly makes a dent in the downpayment we would have to pony up just to get a mortgage at a reasonable rate.
The second of course is job security. Owning a house doesn’t make any sense if you aren’t going to be in the area more than 5 years, but how many of us here can say they have a job secured in their area for that long? If you sell it before is up, all the interest and fees would have made it hardly worthwhile….

The part about the jobs is an excellent argument for Albemarle joining TJPED, economic development partnership whose goal is to court good businesses – if we bring in more low-impact, high wage businesses, we all benefit.

Technorati Tags:

(Visited 4 times, 1 visits today)

3 Comments

  1. Dave Norris February 20, 2006 at 15:12

    Jim,

    While housing costs are primarily driven by supply and demand in the marketplace, there are proactive things that the public, non-profit and private sectors can do to create more affordable housing for lower- and moderate-income families. In my campaign for Charlottesville City Council, I’ve spelled out a few steps we can take on the local level (see http://votefordave.org/31613.html), and next week I’ll be taking a delegation of 12 Charlottesville residents to DC to urge Congress to take action at the national level (as part of a Lobby Day coordinated by the National Low Income Housing Coalition — http://www.nlihc.org).

    I agree that we cannot and should not rely on government action alone to solve this problem, but if we make affordable housing more of a community priority and challenge our elected officials, housing agencies and housing developers to come up with some creative solutions to the problem, I do believe we can make some real progress here.

    Thanks for bringing attention to this issue!

    Dave Norris
    http://www.votefordave.org

  2. Jim February 20, 2006 at 15:49

    Dave –

    Thanks you for reading!

    I agree with much of what you are proposing, none more than the simple fact that we need to cooperate on a regional basis. I have argued for some time that most, if not all problems faced by our area are regional, rather than isolated to particular localities.

    I look forward to watching your campaign and learning more.

    –Jim

  3. Ray Hyde February 21, 2006 at 02:20

    Slashdot hit on a point. If I go buy a $120,000 Mercedes I can be off the lot in 20 minutes, loan included. Later, I can sell it with no costs involved at all (other than payin off the loan).

    Why is buying and selling a house (that can’t drive off into the sunset) so difficult and expensive?

    One problem with low cost housing is that no one wants it next door. There is no charge involved for being a NIMBY. I suggest that if you go to a public hearing and voice a NO opinion, then there should be a $20 user fee.

    We could use all the money raised to subsidize affordable housing, or if you didn’t raise any money, then the projects would sail through the hearings.