So the typical definition of affordable housing is less than 30% of your income. And yet, the 2007 Census revealed that over 40% of American home owners are spending at least one-third of their income on housing, and the percentage is rising. Low to moderately low income people are the fastest growing category within this stat as well.
Housing prices are falling. For people in lots of debt at the moment, this is bad. For people that own their home it is a slight bummer, but no big deal. For people that would like to be home owners this is actually good. The problem is that property prices are not falling in most areas. Most property has maintained a strong and constant value for a while. The exceptions are areas where their is little to no practical use for the land, and therefor unimportant for our discussion. So, even after the economy bottom’s out and starts to rebound (assuming that it will), there will be little help for people wanting to own a home in proximity to a place they can actually live.
Renting is fine, except for the fact that it will continue to leave millions of people vulnerable to whatever tide of the economy comes next. With steady rental payments and unsteady income and little equity or savings people will drown. Somewhere in the storm we have forgotten that the people who are best set to survive are the ones that own a home outright. They bought it 30 years ago for $50,000, paid $5000 down and no longer have a mortgage. This was the idea back when we devised mortgages. If your housing cost is only maintenance and utilities it becomes much easier to stay in your home.
How the hell does anyone do this today? If you pay $300,000 for your home with only a few thousand down, then make payments for a few years with almost nothing going towards your principle, just to have the economy tank, where do you end up? In the crapper with millions of other Americans right now. In Utah the median family income in 2006 was $58,000. Thirty percent of this is $17,400. Monthly this is $1450. So if you are average and live in Utah you need to spend less than $1450 a month on your housing to be considered on safe footing, to be living “affordably.” This means that you need to take out a loan for no more than $200,000. There are two homes in my neighborhood for less than this right now, both in need of considerable improvement. The kicker is that my neighborhood would not be considered fancy at all, but it is accessible.
It is too hard for people to find stability in the very basic need of housing in a situation like this. The way we do it needs to change. Housing needs to be less of an investment market and more of a building block for our communities and our society. Property needs to be less of speculative venture and more of a grounding and connection to our roles as steward and neighbor. I am not sure what sort of policy, discovery or technology will get us there, but I hope we can figure it out soon.