Jennifer Kermode: Myth-busting on affordable housing
Summit Combined Housing Authority
Typically, myths and misconceptions arise out of someone’s lack of experience or education on a subject. There have been myths and misconceptions floating around about affordable housing for decades. Every once in a while it’s a good idea to air out the myths.
Myth #1: Affordable housing (read “deed-restricted”) negatively impacts housing values. Busted! This is just plain incorrect, particularly since our county’s real estate appraisers have confirmed for me that the sales prices of homes located in or near deed-restricted neighborhoods have not been depressed at all. The Wellington neighborhood in Breckenridge and South End Village in Frisco provide excellent examples. An investigation into recent sales prices of market rate homes in these areas indicates no negative impact of value due to their proximity to deed-restricted homes. In fact, data shows that the prices of such homes are still increasing at the same pace as those located further away from these neighborhoods.
Myth #2: Local governments “hand out” housing. “Hand out” means “free.” Busted! There are no free homes (especially deed-restricted ones) that I am aware of. You might find a free lunch in the county, but you won’t find a free home. Towns will subsidize the cost of developing affordable homes to allow them to be sold at a price that is attainable by local workers (I’ll bust the wages argument next). The money they spend doing this is actually an investment into their own survival. Most deed-restricted homes are owned by locals who pay property taxes and pay sales taxes, and those who own businesses pay personal property and commercial property taxes (add lower crime rates, better schools, etc., and it’s a pretty smart investment). These homes aren’t “free” once they’re purchased either: Most have the same kind of mortgages that market rate homes have, with monthly payments that still need to be made.
Myth #3: Employers should pay a “living wage” so everyone can afford a home here. Busted! The average home price (for all property types) in Summit County as of the end of December, 2008 was $582,545 (thanks to data provided by Land Title). In order to even qualify for a mortgage for that home price, with 10 percent down at a 5.25% interest rate, you would have to earn $9,271 per month in gross income (or $53.49 per hour), and have no other debt. So let’s be realistic: If you’re a business owner, can you afford to pay your employees $53.49 per hour and stay in business? Not in a resort community.
Myth #4: If you sleep in your car for six months you can save enough for a down payment on a market rate home. Busted! Simple math: Ten percent of $582,545 equals $58,255. Divide that by six months and you’d have to be earning $9,710 per month to do this (and of course, not pay taxes on your income, or eat, or have any other expenses).
Myth #5: There is no demand for affordable housing in Summit County. Busted! The Housing Authority has just over 400 people on our interested list for buying deed-restricted homes. There are currently eight existing deed-restricted units listed for sale on the Housing Authority’s website. Six of those are rented right now (yes, the ones at Vic’s Landing near Breckenridge are rented to local workers; they are not sitting empty). A search of the SDN real estate listings shows only a handful of deed-restricted units for sale. Why so few? Demand is high. Why? Deed-restricted homes are affordable, generally located in neighborhoods where the lights are on, full of people who know each other. Supply is low. Why? Pressure from second home-owner demand means prices for land have sky-rocketed (as of December 2008, average vacant parcel cost is $470,260), and its availability is scarce (thus the County’s efforts to identify parcels suitable for affordable housing development).
Myths and misconceptions develop lives of their own relatively quickly and can morph into creepy monsters if not attacked head on with the truth. Fortunately, it’s relatively easy to sum up these truths: Deed-restricted homes are a benefit to our county, there are no free homes here, “livable wages” won’t happen, your car is not a good place to live, and we definitely have the demand for it!
If you have questions or concerns about affordable workforce housing in Summit County, visit our website at http://www.summithousing.us or call (970) 423-7043.
Jennifer Kermode is executive director of the Summit Combined Housing Authority.
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