Have you considered a Sacramento mortgage?
If you’re thinking of settling in California, you might want to. About two of every five first-time home buyers could afford a home during the fourth quarter in Sacramento County, a slight increase from the third quarter - and a much better rate than home-shoppers statewide.
The county’s affordability index inched up to 41 percent, from 38 percent in the third quarter and 40 percent in fourth-quarter 2005, according to a California Association of Realtors report released Friday.
The county earned the highest affordability rating in the state, tied with Fresno County and the High Desert, which includes the cities of Lancaster and Palmdale. Unlike much of the Golden State, a home loan in Sacramento isn’t impossible to come by for middle-class wage earners.
In terms of the entire California housing market, the affordability index improved to 25 percent, compared with 24 percent in third-quarter 2006 - and a bit lower than the 27 percent rate in fourth-quarter 2005.
Exorbitant California home loan costs mean Los Angeles, Santa Barbara and San Francisco counties have the lowest affordability rates - at 19 percent - in the state.
The affordability rate for first-time home buyers is based on the county’s median home price and the median income.
Sacramento County’s affordable housing ranking is based on a median home price of $310,340 and median annual income of $62,900.
The average figures above would result in a monthly California mortgage payment of approximately $2,100, including property taxes and insurance.
SOURCE: Sacramento Business Journal
The Federal Home Loan Bank of Pittsburgh has allocated $24.2 million for affordable housing in 2007.
The donation includes $17.15 million for the Affordable Housing Program, $7.64 million for the First Front Door lower-income home ownership grants program - in order to everyone to have the chance to qualify for various mortgages - and $1 million for a pilot housing rehabilitation grants program.
With assets of $77.4 billion, FHLBank Pittsburgh, one of 12 government-sponsored enterprise created by Congress in 1932 to provide a steady stream of low-cost housing finance, serves 334 financial institution members across Delaware, Pennsylvania and the West Virginia housing markets.
FHLBank’s 2007A AHP funding round is now open and applications from project developers are being taken until March 29.
The 2007B funding round will open in August and close on September 27. Since 1990, the AHP has distributed approximately $125 million in grants for the construction or rehabilitation of more than 22,000 rental and owner-occupied affordable housing units.
The First Front Door program (formerly the Home Buyer Equity Fund) has been available to lower-income first-time home buyers since 1997. The program provides $3 in grant money for every $1 contributed by qualifying home buyers to help meet down payment and closing costs. The program takes applications on a rolling basis through participating FHLBank financial institution members in local communities. The $7.64 million applied to First Front Door in 2007 includes about $1.6 million carried over from 2006.
As home loan rates edged downward during the fourth quarter of 2006 and some real estate markets took price hits, affordability improved - albeit only marginally, according to a report released Thursday.
Approximately 41.6 percent of homes sold during the fourth quarter were affordable to Americans earning the median household income of $59,600, according to the Home Opportunity Index, constructed quarterly by the National Association of Home Builders and Wells Fargo.
This compares with 40.4 percent during the third quarter.
NAHB president Brian Catalde, a home builder from Playa del Rey, Calif., attributed the improvement to declining mortgage interest rates toward the end of the year.
Where to buy
The Indianapolis housing market was, once again, the most affordable major housing market in the United States. The median home sold there, already low at $122,000 during the previous quarter, fell to $113,000 during the last three months of the year.
With a median income of $65,000, 89 percent of the homes sold were affordable to the average household.
Other affordable major markets included: Youngstown-Warren-Boardman, Ohio-Pennsylvania.; Detroit-Livonia-Dearborn, Michigan; Toledo, Ohio; and Buffalo-Niagara Falls, New York.
Conversely, those seeking a California mortgage would run into trouble in Los Angeles; it was named the nation’s least affordable market again. Only two percent of the homes sold during the quarter there were affordable to those households bringing home the median earnings for the area, $56,200.
The median sale price was $525,000.
Santa Ana-Anaheim-Irvine, California; San Diego-Carlsbad-San Marcos, California; and New York-White Plains-Wayne, New York joined Los Angeles near the top of the unaffordable list.
SOURCE: CNN Money
A crisis of affordable housing in Palm Beach County is even more dire than previously thought, the South Florida Sun-Sentinel is reporting today.
What’s more, those figures are only going to get worse in the coming years, a planning consultant told county commissioners Tuesday.
Consultant Robert Gray said that within five years, an additional 29,700 people or families will be unable to afford home loans to buy houses or even condos in Palm Beach County.
Meanwhile, that number will climb as high as 93,300 by the time the county is completely developed, indicating a sharp rise from the projected 60,000 of a few years ago.
Gray’s findings were the result of two reports commissioned by the county to look at affordable housing, and also workforce housing, which includes families at a higher income.
“Bluntly, people can’t afford to live and work here. That’s a significant problem in this county,” said.
But even as commissioners called for urgent action, they found themselves tangled up with developers and locked in a familiar debate that has hampered a strong move forward.
Many of the suggestions were for small-scale projects, leading Commissioner Burt Aaronson to publicly charge fellow commissioners of tackling the problem too slowly, placing much of the Florida economy at risk.
“What we need is a comprehensive plan,” Aaronson said.
Late last year, based on a housing study conducted in 2000 and updated in 2003, county officials implemented requirements on developers to set aside 16.5 percent of new homes to be priced between $164,000-304,000.
That range makes for reasonable Florida mortgage payments in an area where home prices are often double that. But can officials succeed in providing enough housing that makes the grade?
The commission also set up a Community Land Trust and are working on incentives including mitigation or impact fees on big-box stores or large mansions to help fund workforce housing.
According to new reports, 2-3 bedroom homes had to cost between $113,000 and $130,625 in 2005 to be affordable, while the average home sales were at $390,000 that year.
Home prices have dropped in Florida slightly since then, but Gray said they had likely bottomed out at $370,000. That’s of little solace to those with lower or even higher incomes who can’t afford a mortgage loan near big enough.
Commissioners called for action. Aaronson urged building a transportation corridor and an entire community of affordable housing, even suggesting Mecca Farms, the former proposed site for Scripps Florida.
But Commissioner Karen Marcus said that plan was prohibitive, and would meet enormous environmental hurdles. She and Jeff Koons suggested alternatives to buy up individual homes or small communities.
“Let’s do something today,” said Commissioner Jess Santamaria. He suggested a land trust because land is the most costly aspect of a new home.
Gray suggested that what the Florida housing market needs is a new paradigm, where young people waited longer to buy and set their sights on smaller, more compact and affordable homes. Of course, he said, it also fell on the county.
“Part of it is how do you provide money to fill in some of the gap,” he said.
With Alabama mortgage loans - and housing in general - so far out of reach for many, the following is good news:
The Federal Home Loan Bank of Atlanta is awarding $4.6 million to affordable housing projects in the stats, part of a $20.9 million allocation to projects in 12 states and Washington, D.C.
The $20.9 million will provide grants and subsidies to 68 affordable housing projects, or 2,777 housing units. Individual grants range from $23,000 to $500,000.
The funding will help local community developers build, buy or preserve 2,429 units in Alabama, Florida, Georgia, Maryland the Carolina and Virginia housing markets. It will also be used to develop 348 units through partnerships in five states outside the FHLBank Atlanta’s southeastern district.
Alabama’s share of the funding will be used for 626 units in the state.
“This funding will help developers bring affordable housing projects with total development costs of more than $230 million to neighborhoods and underserved communities from Arkansas to [the Maryland housing market],” Raymond Christman, FHLBank Atlanta’s president and CEO, said in a news release.
The awards are part of a competitive grant program intended to spur the development of owner-occupied and rental housing for very low-, low- and moderate-income families. The hope is to avoid dangerous bad credit mortgages for this demographic.
Awards are made biannually to financial institutions and community housing partners. FHLBank Atlanta has provided more than $300 million for affordable housing projects in the Southeast since 1990.
We recently reported on the disturbing number of Americans currently unable to afford housing costs across the country. Now, let’s focus on a specific niche having difficulty in this area:
Health-care workers.
Such professionals may be in demand, but in many cities they aren’t able to afford a median-price home, according to a study released last week.
Licensed practical nurses were priced out of the average home in 187 of the 202 metropolitan areas studied, according to the report, “Paycheck to Paycheck: Wages and the Cost of Housing in America,” released by the Center for Housing Policy. Funding for the annual study came from Freddie Mac.
The situation wasn’t much better for registered nurses: they couldn’t afford a median-price home in 115 of the cities studied. Physical therapists in 104 of the areas were priced out the chance to apply for a home mortgage.
The results are distressing, considering the large demand for health-care workers in many job markets, Barbara Lipman, research director for the Center for Housing Policy told MarketWatch.
“With the aging of the population and increasing reliance on health care, it’s alarming to consider that some of these positions in hospitals are going vacant because people can’t afford to live in communities in which they serve,” she said.
Take, for example, the Baltimore housing market, where Johns Hopkins Hospital is based. The median home price there is $275,000, according to the report.
Assuming that not more than 28% of household income would be spent to pay the Maryland mortgage, property taxes and insurance - and factoring in a 10% down payment - the annual income needed to purchase a home of that price in Baltimore is $94,206.
But a registered nurse makes a median annual salary of $60,504 in that market, while a licensed practical nurse makes $38,306. A nursing aide’s median salary in Baltimore is $25,532, a physical therapist makes $64,400 and a home health aide makes $21,063.
Prices are a bit more affordable in the Rochester, Minnesota housing market, where the Mayo Clinic is based and the median home price is $149,900. The report figured the annual income needed to purchase a home of that price was $51,351 - an amount that a registered nurse or physical therapist making the median annual salary could afford.
Even in Rochester, however, licensed practical nurses, who have a median annual salary of $39,035, couldn’t afford the median home. Neither could nursing aides, who make a median $25,404, or home health aides, who make a median $21,643.
On a national scale, an annual income of $84,957 was needed in order to qualify for a mortgage and/or purchase a median-price home, which cost $248,000 during the third quarter, according to the study.
Nationally, registered nurses had an annual median salary of $58,640, licensed practical nurses followed with a median $37,127, and nursing aides made a median $24,745, the study found. Physical therapists made a median $62,417 and home health aides a median $20,414.
A new $7 million multifamily project that combines affordable housing and green design broke ground yesterday in Gallup.
The Chuska Apartments will be a 30-unit project serving residents who make between 30 and 60 percent of the area’s median income. Ten of the units will be set aside as transitional housing for homeless families with children.
Conceived by the Supportive Housing Coalition of New Mexico, the project was one of the winners of the New Mexico Mortgage Finance Authority’s (MFA) 2006 tax credit design competition.
The majority of funding came from a $6.5 million tax credit equity that leverages more than $1 million in additional financing, including a $25,000 Green Communities grant from The Enterprise Foundation, a $50,000 land donation from the city of Gallup, $189,000 from the New Mexico Capital Outlay grant, and a $15,000 development initiative grant from the U.S. Department of Agriculture Rural Communities.
MFA will provide additional construction financing, consisting of a $650,000 loan through its Primero program and a $400,000 Housing Trust Fund loan.
With first-time home buyers facing affordability issues in the state, this is hopefully the first step in correcting such a problem.
U.S. home prices may have dipped over the past year - but many American workers would still struggle to afford a median-priced home in major cities, a new study reported by CNN Money said Wednesday.
“American workers are really not gaining ground and they’re so far behind in the first place,” said Barbara Lipman, research director for the nonprofit Center for Housing Policy, which conducted the study.
While the median home price in the 202 largest metropolitan areas declined 2 percent from a year ago to $248,000 in the third quarter of 2006, mortgage rates rose enough over the year that homes actually became less affordable as pay did not keep pace.
“The real story is what happened to salaries,” Lipman said. “Lower-paid occupations - such as in retail, or home health workers - their salaries went up only about 3 percent.”
The study found an annual income of nearly $85,000 was needed to afford the median-priced U.S. home.
In the New York metropolitan area, a $500,000 median-priced home required a $171,000 annual salary. The median-priced home in the San Francisco housing market, the most expensive U.S. market, was $759,000, requiring income of $260,000. In less-expensive Chicago, the median-priced home cost $254,000, requiring an $87,000 salary.
On the opposite end of the spectrum, Mansfield, Ohio, homes cost a median $85,000, requiring $29,118 in income for those considering an Ohio mortgage.
The study assumed home buyers needed a 10 percent down payment and could afford to pay 28 percent of their income on mortgage payments, property taxes and home insurance.
In reality, many households expend a much higher percentage of their incomes on home loan payments, Lipman said. To afford that, consumers cut other expenses such as for health care and transportation, she said, citing research showing unaffordable housing is the major reason families lack health insurance.
Other ways families cope with high housing expenses is to work longer hours or extra jobs, or by crowding in more income producers, she said.
An October 2006 survey by the group found families who seek to buy less-expensive homes in further-out suburbs - adding to urban sprawl - pay so much more for transit that it eliminates the savings.
While home prices range widely across the country, wages for low-wage jobs - from teachers to janitors - are about the same no matter where they are located, Lipman said.
The report cited housing aid programs offered by some big-city hospitals that have plenty of modestly-paid workers.
“For the low- to moderate-income individuals that we’re talking about, they’re not going to be helped by marginal declines in home prices,” Lipman said. “The only way to address the problem is to create more affordable units [homes] - which may mean higher density units, townhouses and condos.”
The Federal Housing Finance Board said it won’t adopt at this time a rule that would have required more of the Federal Home Loan Banks’s capital to come from their profits.
The rule, which was proposed in March, would have forced the 12 Home Loan Banks to cut dividend payments to members in half until reaching a minimum amount of retained earnings. The Washington-based regulator announced the decision in a statement on its website, according to the Allentown Morning Call.
“The approach to retained earnings and the timetable for the proposed actions both were troubling,” Kurt Pfotenhauer, a senior vice president at the Mortgage Bankers Association, said in a letter this month to finance board Chairman Ronald Rosenfeld.
The banks lend money to thrift, credit union, insurance company and commercial bank members at below-market rates to finance their home loan holdings. Members were concerned a cut in the dividend would hurt their efforts to provide lower-income housing.
Fred Banuelos, President and CEO of the Alliance for Building Communities in Allentown, said in November that the FHLB has been instrumental in providing funding for its affordable housing projects.
The Alliance has two projects under way that involve FHLB grants. One is a knitting mill in Hamburg it is turning into 27 units of senior housing, the other a warehouse in Tamaqua it’s converting into 14 townhouses for low- to middle-income families.
“It would be very disappointing if in the future projects like that were jeopardized because of the rule change,” Banuelos said.
The Home Loan banks also buy and hold home mortgages and related assets. They raise money as a group in the so-called agency bond market just like publicly traded government-chartered mortgage finance companies Fannie Mae and Freddie Mac, and are the biggest borrowers in the United States.
The board put off acting because “it has become clear that almost every bank has sought to comply” with a 2003 request that they increase their retained earnings and that they’re currently committed to meet the objectives, finance board member Geoff Bacino said in a statement.
“For those reasons, there is no need for the board to consider a retained earnings proposal at this time” he said. The board may revisit the retained earnings issued with a planned update of its risk-based capital rule.
The board also adopted a rule creating a maximum amount of “excess stock,” or stock held by members that isn’t required to do business with them. It also voted to reappoint 25 “public interest directors” for an additional year.
When fire destroyed Helen Bowles’ home in 2003, Habitat for Humanity stepped up to the plate. Last month the group started construction on a replacement home that will be located where the old one once stood.
In one respect, Bowles was lucky: She still owned the land.
Otherwise, she’d be out of options.
“We can get a house built in probably six months if we just have a place to put it,” Culpeper Habitat President Tom Davis told the Culpepper Citizen, which reported this story December 20. “But that’s the biggest problem we have.”
Property values in Culpeper escalated along with the rest of the Virginia housing market boom. Land once deemed effectively worthless can now bring enormous profits, making many landowners less willing to donate.
The problem has also affected existing Habitat homeowners. Escalating land prices have accelerated county-wide real estate values, leading to property taxes increasing by as much as hundreds of dollars.
Such an increase would strain most households. Habitat families and other low income residents are especially hard hit — their income increases are no match for soaring land values and tax rates. And they’re unlikely to have land of their own for Habitat to develop; owning property would likely make them ineligible for affordable housing assistance.
The problems are especially hard on Culpeper’s Habitat affiliate, formed only seven years ago. Time usually spent spreading the word about their mission has instead gone toward the challenges of a changing economy.
The organization does more than merely build a house. It helps applicants develop budgets, and teaches them to maintain a home. More than anything else, it must stay on top of problems such as rising taxes or homeowner’s insurance. Even a few rough days can throw family finances into chaos.
“For rural areas this is a new problem. Closer to the cities, they have to do a lot of fund-raisers and other things to bring in money to help supplement building a house. We’re getting to that spot too,” Davis said.
“Some Habitat organizations have communities, whereas we’ve had to take what comes to us - a house here, a house there. By the time we got going, around our second or third house, land went through the roof.”
Experts predict a slowing market, but also doubt that will decrease home prices, and thus, the costs of a Virginia mortgage. Expensive homes will remain expensive, and options for organizations like Habitat are dwindling.
The Culpeper affiliate has so far built three homes in Culpeper, with the Bowles home pending as a fourth. Labor is usually donated, material usually reimbursed. It costs $60,000-90,000 to build a home. Once the house is complete, a sale takes place just like any other home sale. Applicants assume an interest-free home loan.
Davis estimated that land can only cost around $20,000 for Habitat to handle the purchase. But they’ve had trouble finding anything less than $50,000. Habitat maintains the right of first refusal - meaning that they get to make an offer before the sale.
Both State Delegate Edd Scott and Senator Ed Houck have met with Habitat representatives on the issue. Both proposed a tax exemption to Habitat families.
There’s one problem though - the state constitution.
Article Ten calls for taxation of all property, meaning that the plan would first need an amendment.
“It doesn’t appear to be a readily available legislative solution at this time,” Scott said. “But both Senator Houck and I are interested. We want to provide Habitat with any tools we can to help them in the work they do.”
Habitat has instead initiated the mortgage refinance for the cash part of the family’s loan.
The rising values in Fauquier County have forced a chapter with 37 homes to shift its focus toward repairing existing homes. Affiliates have suggested values be based on the actual sale cost of the home, rather than the amount of the assessment.
