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Rents Expensive in Virginia

The National Low Income Housing Coalition has just come out with a report showing the affordability of rental housing by state. Virginia comes out looking pretty expensive.

In order for a single person to be able to afford rent and still stay within the guidelines advising total housing costs be less than 30% of income you'd have to make almost $20/hour. And keep in mind that that's the statewide average.

In Northern Virginia that means you need a lot of people helping to pay the rent. At minimum wage on average in Virginia you need 2.7 workers working full time to afford a 2 bedroom apartment. Imagine how many in the much pricier Northern Virginia suburbs.

If you think this issue doesn't impact you, you must not own a home or drive. Housing affordability drives people to commute longer distances to their jobs just to be able to afford a roof over their heads. The traffic that generates makes people who can afford it more and more inclined to live closer to their jobs. Guess what, most of their jobs aren't in Fauquier, Culpeper or Rappahannock counties. And, that, my friends, impacts the price of your home here.

Homeowners who want to sell some day should be very interested in solutions to both the affordability issues and the traffic problems in our area.

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Where's The Money?

Virginia was awarded $38.7 million from the federal government to buy foreclosed homes. This was part of the Housing and Economic Recovery Act of 2008. And, Virginia's been trying to get rid of it ever since!

The program is called the Neighborhood Stabilization Program. The funds are designed to allow local communities to purchase foreclosed homes and then to rehabilitate, resell and/or redevelop these properties to stem the decline of housing values in a neighborhood.

And, even better, it's then possible to combine this with other programs to help local police, teachers, firefighters, etc. to become homeowners.

So, why is the Commonwealth having so much trouble giving this money away?

They recently sent representatives to the mid-year Virginia Association of REALTORs meeting to drum up interest among real estate agents. The Commonwealth has sponsored a series of seminars around the state to inform localities about the program and how to apply. And, still, much of the money goes unused.

I know it's not because local communities don't have a problem with foreclosures! Ask anyone in Lakeview in Culpeper if they'd like to see some homes bought up by the government to help stabilize housing prices!

So, I'm going to theorize why the money sits there.

1. Local governments view the burden of taking this project on as requiring too many resources. There is, of course, paperwork to be submitted. Appropriate neighborhoods must be found and data on the property values and vacancy rates obtained. The requirements state that a qualified pool of buyers must be available. Once homes are bought with this money, they must be rehabbed and then sold. Potential buyers must be screened, etc. This probably all sounds overwhelming to local governments already spread thin.

Solution: Partner with local real estate agents, Habitat for Humanity and other local groups who can contribute expertise. Form a task force to make this happen. I'll volunteer my time to make this work!

2. A belief that there aren't any neighborhoods that qualify. They're looking at neighborhoods that have somewhere in the neighborhood of 10% foreclosure rate.

Solution: But "neighborhood" is defined by the local entity and as long as you can justify why you chose that as a "neighborhood" it shouldn't be too hard to find areas that would qualify. Heck, last time I checked there were enough foreclosures in Rappahannock County to qualify!

3. The word hasn't gotten out and local governments don't know about the program.

Solution: I'm doing my bit here. I hope other bloggers will add their voices. Local press can help. And local communities of individuals who might benefit, i.e. teachers, police, fire fighters, can let their local governments know they'd like to see this program used here.

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Affordable Housing Legislation

There's some good news on the affordable housing front. Or maybe I should say there's the potential for good news there in 2008.

Both the House and Senate passed legislation this year to create a National Affordable Housing Trust Fund Account. This would be a dedicated funding source for the development, preservation and rehabilitation of 1.5 million affordable homes over 10 years.

Heaven knows this area badly needs more affordable housing. Even with prices currently sinking,  housing remains unaffordable for many people given the average wages in this area. And all those new retail shops in Culpeper, Warrenton and Gainesville aren't going to help! Find me one that pays enough for their employees to qualify for a mortgage!

While both the House (HR 2895) and Senate (S 2523) have passed these bills, they are, of course, different versions. So they'll have to be reconciled in 2008. And, that's where they're likely to run into some trouble.

Right now these bills are bipartisan efforts. The Senate version, for example, was sponsored by three Republicans and three Democrats. But there are definitely those who oppose this bill, particularly for the funding mechanism, with revenues coming primarily from Fannie Mae and Freddie Mac.

So, if this is an issue that's important to you, please contact your Senators and Congressional Representative. It would be a nice gift to bring in the New Year!

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Workforce Housing

We have a guest blogger today.  His name is Chris Moyles and he is with the Rapidan Better Housing Corporation, a housing oriented non-profit. This is actually taken from a longer post on a local list-serve. But I thought it a timely and important topic for discussion. I'm anxious to hear your thoughts!

First, "Workforce Housing" is a relatively new catch-phrase that has overtaken "Low-Income Housing Project" (with its associated connotations).

However, there is a much better phrase that reflects a new vision of "housing".

That phrase is "Sustainable Community Design". This phrase illustrates that "housing" is just one part of what makes a community viable and sustainable.

Sustainability in this context can be defined as:

The ability to provide for the needs of the community without damaging the ability of future generations to provide for themselves. When a process is sustainable, it can be carried out over and over without negative environmental effects or impossibly high costs to anyone involved.

This concept is vitally important to a discussion of housing for several reasons:

It is important to understand that "affordable housing" is not affordable if it is not tied in to the local community and economy.

Housing is not affordable or sustainable if its occupants must drive far out of the community to find employment. Similarly, local employment is not sustainable if employees must come from far outside of the community to fill those positions.

Community members who have to travel long distances for employment are less likely to engage in the community - as volunteer rescue squad and firefighter members, school mentors, and in other civic opportunities. They are less likely to simply "have the time."

A drive through the suburban sprawl of northern Virginia will illustrate these points. The end result of poor planning in those areas is terrible traffic congestion, poor air quality, and a diminished "quality of life" for all involved.

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Affordable Housing

Date: Aug. 28, 2006
Tags: None

A recent study by George Mason University makes it clear what most of us here probably already know.  Local wages are not even coming close to keeping up with the increased costs of housing.  Given today's news about stagnant wages nationally, this can not be good news for the local real estate market.

Between 2000 and 2005 rents increased in the northern Virginia area 2.7 times faster than wages.  During those same years the cost of buying a home increased 12 times faster than wages.  If you don't see a connection between those numbers and the current slump in the real estate market I'd suggest you're burying your head in the sand!

Income for a family of four now needs to be as high as 94 to 115 percent of the median income in order to live and work in this area without any public assistance or subsidies.

Lest you think this is only a problem for the poor, let me suggest that it impacts all of us.  First of all, the teachers, firefighters, policemen, etc. that we depend on in our communities can no longer afford to live here. That's bad for all of us.

Secondly, the housing prices force families to move further and further out in order to obtain housing that fits within their budget.  This further increases the pressure on roads and mass transit, virtually guaranteeing taxes will have to rise to fix the transportation problems. Increase taxes enough and you'll make this area less attractive to businesses and the economy overall will suffer.

The economy will also suffer as employers are unable to recruit talented people because they don't want to pay the prices either in actual dollars or in the loss of family time commuting, that would allow them to afford to live here.

I'm not proposing solutions here today, although I plan to have another blog talking about possibilities down the road.  But I thought these numbers were shocking enough and important enough to warrant a discussion.

As always, your comments are welcomed!

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