glorila nò (Ohsevner
April 5, 2000
Focus
Page 3
Fair Housing Subsidizing the
“hot m arket”
by
J ohn P ow ell
Portland’s housing market is fitting the
national trend and the west coast trend, more
specifically, with its soaring housing and
land costs. This indicates that it is not the
Urban Growth Boundary that is responsible
for the rise in housing costs, but rather a
supply and demand dynamic.
Increased housing costs alone do not provide
the w hole picture, how ever, and it is
necessary to compare the rise in housing
costs to the region’s income. The Median
Family Income for the Portland Region has
remained relatively stable around $35,000
while housing costs have soared.
Dangers o f “hot market” include: Increased
scarcity o f affordable housing, leading to
homelessness, displacement o f low and
middle-income people from the region, and
unstable, unsafe housing conditions for those
who are priced out o f the rental and ownership
market altogether.
Community/regional instability as low and
middle-income residents face huge housing
challenges w ith w ork fo rce threatened
because housing is unaffordable.
More localized displacement as affordable
housing is eaten up through gentrification,
displacing large numbers o f low-income
residents from their homes and communities.
The communities these low-income and high-
need residents are relocating to have fewer
resources with which to address their needs.
A ffo rd ab le h o u sin g p re se rv a tio n and
development are required to subsidize the
“hot market.”
Affordability Mechanisms-Preservation and
Development o f Affordable Housing.
There are a num ber o f ways to create
affordable housing in the Portland
region. The Com m unity Development
Network and the Coalition for a Livable
Future have compiled a useful review ofFair
Share strategies, called “Fair Share Housing
Allocation Strategies: A Review o f Methods
and Approaches.” (Oct. 1998)
The provision o f affordable housing is an
issue that requires the input and guidance
from governmental resources as well as
private sources. Government must play an
important role in creating and preserving
affordable housing through legislative
mandates and guidelines, and by providing
resources (money, land, tax subsidies) that
encourage the development, replacement,
and the preservation o f affordable housing
in a region.
Funding sources must come from a wide
variety o f existing sources and by lobbying
for more public and private investment in
affordable housing.
Some o f the funding sources that should be
used include: Regional, County, and City
resources coordinated under a regional plan.
Affordable housing trust funds may be set up
We turn renters into homebuyers.
at a local or regional level. Funding sources
for the trust fund may come from land sale tax,
or speculation tax for those who are reaping a
huge financial gain from sale o f property
during the hot market (strategies to slow the
hot market).
State Resources: some states have set up
Advantages
affordable housing trust funds.
■ 1 % down payment...no Private Mortgage Insurance required*
Federal Resources: tax incentives, including
■ Most closing costs and pre-paid costs may be paid by seller
the Low Incom e T ax C redit and the
or other interested party
Rehabilitation Tax Credit these are important
■ Flexible debt-to-income ratios: maximum 40%
sources to link private investm ent and
a ffo rd a b le h o u sin g d e v e lo p m e n t or
Features
preservation.
■ Fixed-rate financing
The vagaries o f the rental housing market and
■ Cash reserves after closing are not required
the importance ofhome ownership in building
equity for American families are destabi lizing
Properties
forces for individuals, communities, and
■ Owner-occupied single family residences
regions. Permanent affordability mechanisms
■ Condominiums with at least 30% owner-occupied
ensure that the subsidy that is invested in
Program Requirements
affordable housing is not completely lost in
■ Must complete approved Home Buyer Education
the future. If public or private investment in
affordable housing is lost by rent increases or
■ Income can not exceed 80% of area median
property sale, then there is the risk that new
■ Borrower must pay the 1 % down payment
subsidies will be needed in the future to
address affordable housing crises in the future.
Some proposed mechanisms
unvw. usbdnk. co m
Your needs. O ur tools’
to ensure the permanency of
affordable housing include:
Public ownership
P riv a te n o n -p ro fit
ownership
Community land trusts-
p u b lic ly or p riv a te ly
administered
•
Covenants on the land
that require affordability
M andates by lo c a l/
regional government that
require a certain amount of
a ffo rd a b le
h o u sin g
p re se rv a tio n
or
development, often linked
to
o th e r
h o u sin g
development or industrial/
com m ercial developm ent
(p ro v id in g
a ffo rd a b le
housing for com m ercial
development’s workers).
They don’t come in XL.
An important factor to be
So fix your roof instead.
considered when proposing
PDC offers loans for home repairs
p e rm a n e n t
a ffo rd a b le
and improvements.
housing mechanisms is that
one o f the primary methods
o f accumulating wealth in
this country is through home
ownership. Although it is
important to preserve the
investm ent in affordable
housing, and this should be
a priority, it should not leave
out all opportunities for
a c c u m u la tin g
w ealth
through the equity gained in
hom e
o w n e rsh ip .
U.S. Bank"
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