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There are many areas that are too expensive for me, and I just don't buy houses in those areas. That doesn't mean the people living in those areas are doing it

There are many areas that are too expensive for me, and I just don't buy houses in those areas. That doesn't mean the people living in those areas are doing it at my expense, nor does it mean the government should intervene and subsidize a home for me.

travmatt 10y ago
This is known as the 'drive till you qualify' approach to housing and has been studied for some time. Just because you'd rather a longer commute doesn't mean it's in anyones best interest to do so.. "2. The Development and Rehabilitation of Affordable Housing Provides Immediate Fiscal Benefits for States and Localities SUMMARY: Cities and states benefit financially from the development or substantial rehabilitation of affordable housing. Some of the most significant sources of revenue during the construction or rehabil- itation phase are sales taxes on building materials, corporate taxes on builders’ profits, income taxes on construction workers, and fees for zoning, inspections, and the like. Modeling one-time fiscal benefits: The fiscal effects of the construction of affordable housing vary from place to place depending on local tax structures, construction costs, development fees, and whether the local mix of industries is conducive to capturing construction-related activity. As with the economic impact estimates discussed above, the fiscal effects discussed in this section are largely derived from one of the input/output models, which are based on actual, industry-specific purchasing and production activities and adjusted to account for local variations. The National Association of Home Builders (2010) uses national averages to estimate that local jurisdictions stand to gain roughly $827,000 in immediate revenue from the construction of 100 LIHTC family units and roughly $768,000 when 100 LIHTC senior units are built.8 As Figure 2 shows, permitting/impact fees and utility user fees represent more than half of all local government revenues associated with the construction of a 100-unit LIHTC property for families.9 These estimates provide an important national baseline for the country’s most prolific affordable housing production program but, given local economic and project nuances, cannot be directly applied to any specific housing market or project. The input/output models discussed above have also been applied by researchers to produce more localized information on the fiscal effects of specific affordable housing programs and developments. The following are examples: Hangen and Northrup (2010) analyze the effects of developing and rehabilitating 582 affordable homes in Rhode Island in 2007 and 2008 using $25 million in housing bond funds and conclude that the activity had a significant impact on the income, corporate, and sales taxes collected by the state. The authors estimate that the $25 million in state funding leveraged an additional $231 million in investments, and the subsequent income, corporate, and sales taxes and fees associated with the total economic activity increased state revenues by roughly $16.7 million during the development period (excluding local taxes and fees). A study conducted by the Minnesota Housing Finance Agency (2009) provides further evidence that a public investment in affordable housing can leverage significant capital and generate real revenue for state and local governments. Over two years (2006-08), an investment of $260.1 million in affordable housing leveraged roughly $470 million in additional public and private funds and resulted in nearly $1.4 billion in direct, indirect, and induced economic activity. This level of activity generated roughly $62.5 million in state and local tax revenue. In an analysis of a proposed Pennsylvania state housing trust fund, Econsult (2009) focuses on state-level impacts and finds that for every $1 million in proposed spending, the state stands to gain $82,000 in revenue from the construction of new affordable single-family homes; one-time state revenues would be even higher if the $1 million were spent on the construction of affordable multifamily housing ($86,000) or on remodeling or rehabilitating existing homes ($116,000). These estimates exclude taxes and fees that local jurisdictions may impose. Making these estimates even more conservative, they do not include the impact of the construction spending generated by any public or private funds that would be leveraged by housing trust fund dollars. Zielenbach et al. (2010) conduct a fiscal analysis of nine HOPE VI projects and find that the development of affordable housing can represent a significant source of revenue for local jurisdictions. One-time fiscal impacts based solely on sales taxes related to the redevelopment activity (and income taxes in the District of Columbia) range from $38,000 for a 120-unit property to $612,000 for a project with more than 700 units.11 While substantial, these estimates are significantly lower than those reported for tax credit properties above because they exclude fees collected by jurisdictions (e.g., impact and permit fees), corporate taxes on builders, and revenues related to indirect and induced spending. Wood (2004) provides a straightforward calculation of one-time fiscal benefits for states and localities in Utah. The author estimates that more than 7,300 jobs — and $200.1 million in subsequent earnings — are supported annually by housing construction subsidies, rental subsidies to landlords, and down payment assistance provided to low- and moderate-income households. Applying the average state and local tax rate of 10.2 percent to these estimated earnings, Wood pegs the resulting fiscal impact at $20.4 million, which is likely conservative because it ignores other sources of state revenue such as sales taxes on construction materials and corporate taxes on builders’ profits. 3. Homebuyers Who Participate in Affordable Homeownership Programs Are Less Likely to Experience Foreclosure Than Buyers Who Do Not Participate in Such Programs, Thereby Reducing Sometimes Significant Foreclosure- Related Costs for Municipalities SUMMARY: Multiple studies demonstrate that low- and moderate-income homeowners who purchase homes they can afford have a lower likelihood of mortgage delinquency and foreclosure than market- rate borrowers with subprime — and even prime — mortgage products. Given the substantial costs that local governments incur for each foreclosure, programs — whether subsidized or unsubsidized – that create opportunities for sustainable homeownership represent a smart, fiscally sound mechanism for promoting housing stability. The reduced foreclosure risk of affordable and sustainable homeownership programs: Research into the housing market downturn has consistently demonstrated the high rate of foreclosure associated with subprime loans made during the housing boom in the early 2000s (HUD 2010; Immer- gluck 2008; Kaplan and Sommers 2009; Immergluck and Smith 2006a). By contrast, low- and moderate- income borrowers participating in both subsidized and unsubsidized programs designed to help them succeed over the long-term are substantially less likely than similar subprime borrowers to experience problems with their mortgages. Ding et al. (2010) find that among low- and moderate-income borrowers with similar profiles, subprime borrowers were three to five times more likely to default on their mortgage than those who received prime loans through an affordable lending program that provided sound mortgage products with more flexible lending standards. A 2007 study finds that the default rate among participants in the Dallas (TX) Mortgage Assistance Program, which provides zero-interest second loans for down payment assistance and closing costs, was only 4.8 percent, compared to the 9.6 percent average for conventional subprime loans (Federal Reserve Bank of Dallas 2007). Some studies have found that purchasers of affordable homes participating in a variety of programs are less likely to experience defaults or foreclosure than prime borrowers or average borrowers more generally. For instance: A 2009 study of city-based affordable homeownership programs in Boston, Chicago, Los Angeles, New York, and San Francisco finds that all five programs have default rates below the average for their city, and that out of nearly 9,000 low-income families served by all the programs combined, the overall default rate was below 1 percent (Reid 2009). New York City has partnered with nonprofit organizations to build or rehabilitate homes at prices affordable to low- and moderate-income households. Of the 20,614 such homes sold between 2004 and March 2010, only 13 have completed the foreclosure process (Powell 2010) — a rate of only 0.063 percent. The SoftSecond Loan Program in Massachusetts has provided soft second mortgage loans14 to more than 13,700 low- and moderate-income borrowers. In the third quarter of 2009, only 0.75 percent of SoftSecond borrowers were in the process of foreclosure, compared to 1.39 percent of prime, fixed-rate loans in Massachusetts (Campen 2010), and the delinquency rate among SoftSecond borrowers was 5.7 percent, as compared to 9.3 percent for all mortgages in Massachusetts (Massachusetts Community and Banking Council). A national survey finds that homeowners in community land trusts15 are eight times less likely to be in the process of foreclosure than owners of market-rate homes (0.56 percent compared to 4.58 percent at the close of 2009) (Thaden 2010). One modest exception in the literature is the case of the Dallas Mortgage Assistance Program, whose participants had a default rate slightly higher than the state as a whole (4.8 percent compared with 4 percent) between 1997 and 2005. However, the default rate of participants in this mortgage assistance program was 3.6 percent lower than the average for all FHA loans over the same period (Federal Reserve Bank of Dallas 2007), which may be a more representative comparison group. " [The Role of Affordable Housing in Creating Jobs and Stimulating Local Economic Development: A Review of the Literature](http://www2.nhc.org/media/files/Housing-and-Economic-Development-Report-2011.pdf http://www2.nhc.org/media/files/Housing-and-Economic-Develop...)
- burfog 10y ago
  The "drive till you qualify" and "rather a longer commute" assumptions are wrong. You don't have to work in Palo Alto. You can have a short commute if you work elsewhere. This industry is totally relocatable. It's not like mining, shipping, petroleum, or even farming. Computers are available everywhere. Cramming everybody into a little spit of land is crazy. If you really like Palo Alto, you can vacation there. It's not a good budget choice to actually live there.
  - travmatt 10y ago
    "The "drive till you qualify" and "rather a longer commute" assumptions are wrong. You don't have to work in Palo Alto. You can have a short commute if you work elsewhere." The literature I just posted wasn't from the point-of-view of the people who would benefit from affordable housing, it was from the point of view of municipalities and states self-interested in seeing returns on investments in affordable housing. Moreover, how does your logic make any sense at all? If you work in Palo Alto and don't need to travel far, you can be said to have a 'short' commute. If you live further away, then the commute is necessarily 'longer'. If you change jobs -> then the job you left will probably be replaced -> if the job is replaced at the same wages, the person being hired either has to live in an area their wages can't afford or they'll have to commute into it, a 'long' commute and the cycle continues. Your logic really only works if you are only worried about _your_ interests, not the interests of the town itself. "This industry is totally relocatable. It's not like mining, shipping, petroleum, or even farming. Computers are available everywhere." Isn't this arguing my point for me? Unless Palo Alto was incorporated solely for the benefit of computer programmers, there are other people who have lived there and are afforded the right to vote on it's future - teachers, cops, firemen, postal workers, janitors or other professions, and these programmers surely don't operate in a bubble but utilize some type of support staff? Governments shouldn't base policy on the singular peculiarities of one profession. "Cramming everybody into a little spit of land is crazy." I'd argue encouraging urban sprawl ('drive till you qualify') is less sustainable (i.e., more crazy) than encouraging more densely concentrated living/working areas - but that's not research talking, only my intuition.

travmatt 10y ago

This is known as the 'drive till you qualify' approach to housing and has been studied for some time. Just because you'd rather a longer commute doesn't mean it's in anyones best interest to do so.. "2. The Development and Rehabilitation of Affordable Housing Provides Immediate Fiscal Benefits for States and Localities SUMMARY: Cities and states benefit financially from the development or substantial rehabilitation of affordable housing. Some of the most significant sources of revenue during the construction or rehabil- itation phase are sales taxes on building materials, corporate taxes on builders’ profits, income taxes on construction workers, and fees for zoning, inspections, and the like. Modeling one-time fiscal benefits: The fiscal effects of the construction of affordable housing vary from place to place depending on local tax structures, construction costs, development fees, and whether the local mix of industries is conducive to capturing construction-related activity. As with the economic impact estimates discussed above, the fiscal effects discussed in this section are largely derived from one of the input/output models, which are based on actual, industry-specific purchasing and production activities and adjusted to account for local variations. The National Association of Home Builders (2010) uses national averages to estimate that local jurisdictions stand to gain roughly $827,000 in immediate revenue from the construction of 100 LIHTC family units and roughly $768,000 when 100 LIHTC senior units are built.8 As Figure 2 shows, permitting/impact fees and utility user fees represent more than half of all local government revenues associated with the construction of a 100-unit LIHTC property for families.9 These estimates provide an important national baseline for the country’s most prolific affordable housing production program but, given local economic and project nuances, cannot be directly applied to any specific housing market or project. The input/output models discussed above have also been applied by researchers to produce more localized information on the fiscal effects of specific affordable housing programs and developments. The following are examples: Hangen and Northrup (2010) analyze the effects of developing and rehabilitating 582 affordable homes in Rhode Island in 2007 and 2008 using $25 million in housing bond funds and conclude that the activity had a significant impact on the income, corporate, and sales taxes collected by the state. The authors estimate that the $25 million in state funding leveraged an additional $231 million in investments, and the subsequent income, corporate, and sales taxes and fees associated with the total economic activity increased state revenues by roughly $16.7 million during the development period (excluding local taxes and fees). A study conducted by the Minnesota Housing Finance Agency (2009) provides further evidence that a public investment in affordable housing can leverage significant capital and generate real revenue for state and local governments. Over two years (2006-08), an investment of $260.1 million in affordable housing leveraged roughly $470 million in additional public and private funds and resulted in nearly $1.4 billion in direct, indirect, and induced economic activity. This level of activity generated roughly $62.5 million in state and local tax revenue. In an analysis of a proposed Pennsylvania state housing trust fund, Econsult (2009) focuses on state-level impacts and finds that for every $1 million in proposed spending, the state stands to gain $82,000 in revenue from the construction of new affordable single-family homes; one-time state revenues would be even higher if the $1 million were spent on the construction of affordable multifamily housing ($86,000) or on remodeling or rehabilitating existing homes ($116,000). These estimates exclude taxes and fees that local jurisdictions may impose. Making these estimates even more conservative, they do not include the impact of the construction spending generated by any public or private funds that would be leveraged by housing trust fund dollars. Zielenbach et al. (2010) conduct a fiscal analysis of nine HOPE VI projects and find that the development of affordable housing can represent a significant source of revenue for local jurisdictions. One-time fiscal impacts based solely on sales taxes related to the redevelopment activity (and income taxes in the District of Columbia) range from $38,000 for a 120-unit property to $612,000 for a project with more than 700 units.11 While substantial, these estimates are significantly lower than those reported for tax credit properties above because they exclude fees collected by jurisdictions (e.g., impact and permit fees), corporate taxes on builders, and revenues related to indirect and induced spending. Wood (2004) provides a straightforward calculation of one-time fiscal benefits for states and localities in Utah. The author estimates that more than 7,300 jobs — and $200.1 million in subsequent earnings — are supported annually by housing construction subsidies, rental subsidies to landlords, and down payment assistance provided to low- and moderate-income households. Applying the average state and local tax rate of 10.2 percent to these estimated earnings, Wood pegs the resulting fiscal impact at $20.4 million, which is likely conservative because it ignores other sources of state revenue such as sales taxes on construction materials and corporate taxes on builders’ profits. 3. Homebuyers Who Participate in Affordable Homeownership Programs Are Less Likely to Experience Foreclosure Than Buyers Who Do Not Participate in Such Programs, Thereby Reducing Sometimes Significant Foreclosure- Related Costs for Municipalities SUMMARY: Multiple studies demonstrate that low- and moderate-income homeowners who purchase homes they can afford have a lower likelihood of mortgage delinquency and foreclosure than market- rate borrowers with subprime — and even prime — mortgage products. Given the substantial costs that local governments incur for each foreclosure, programs — whether subsidized or unsubsidized – that create opportunities for sustainable homeownership represent a smart, fiscally sound mechanism for promoting housing stability. The reduced foreclosure risk of affordable and sustainable homeownership programs: Research into the housing market downturn has consistently demonstrated the high rate of foreclosure associated with subprime loans made during the housing boom in the early 2000s (HUD 2010; Immer- gluck 2008; Kaplan and Sommers 2009; Immergluck and Smith 2006a). By contrast, low- and moderate- income borrowers participating in both subsidized and unsubsidized programs designed to help them succeed over the long-term are substantially less likely than similar subprime borrowers to experience problems with their mortgages. Ding et al. (2010) find that among low- and moderate-income borrowers with similar profiles, subprime borrowers were three to five times more likely to default on their mortgage than those who received prime loans through an affordable lending program that provided sound mortgage products with more flexible lending standards. A 2007 study finds that the default rate among participants in the Dallas (TX) Mortgage Assistance Program, which provides zero-interest second loans for down payment assistance and closing costs, was only 4.8 percent, compared to the 9.6 percent average for conventional subprime loans (Federal Reserve Bank of Dallas 2007). Some studies have found that purchasers of affordable homes participating in a variety of programs are less likely to experience defaults or foreclosure than prime borrowers or average borrowers more generally. For instance: A 2009 study of city-based affordable homeownership programs in Boston, Chicago, Los Angeles, New York, and San Francisco finds that all five programs have default rates below the average for their city, and that out of nearly 9,000 low-income families served by all the programs combined, the overall default rate was below 1 percent (Reid 2009). New York City has partnered with nonprofit organizations to build or rehabilitate homes at prices affordable to low- and moderate-income households. Of the 20,614 such homes sold between 2004 and March 2010, only 13 have completed the foreclosure process (Powell 2010) — a rate of only 0.063 percent. The SoftSecond Loan Program in Massachusetts has provided soft second mortgage loans14 to more than 13,700 low- and moderate-income borrowers. In the third quarter of 2009, only 0.75 percent of SoftSecond borrowers were in the process of foreclosure, compared to 1.39 percent of prime, fixed-rate loans in Massachusetts (Campen 2010), and the delinquency rate among SoftSecond borrowers was 5.7 percent, as compared to 9.3 percent for all mortgages in Massachusetts (Massachusetts Community and Banking Council). A national survey finds that homeowners in community land trusts15 are eight times less likely to be in the process of foreclosure than owners of market-rate homes (0.56 percent compared to 4.58 percent at the close of 2009) (Thaden 2010). One modest exception in the literature is the case of the Dallas Mortgage Assistance Program, whose participants had a default rate slightly higher than the state as a whole (4.8 percent compared with 4 percent) between 1997 and 2005. However, the default rate of participants in this mortgage assistance program was 3.6 percent lower than the average for all FHA loans over the same period (Federal Reserve Bank of Dallas 2007), which may be a more representative comparison group. " [The Role of Affordable Housing in Creating Jobs and Stimulating Local Economic Development: A Review of the Literature](http://www2.nhc.org/media/files/Housing-and-Economic-Development-Report-2011.pdf http://www2.nhc.org/media/files/Housing-and-Economic-Develop...)

burfog 10y ago
The "drive till you qualify" and "rather a longer commute" assumptions are wrong. You don't have to work in Palo Alto. You can have a short commute if you work elsewhere. This industry is totally relocatable. It's not like mining, shipping, petroleum, or even farming. Computers are available everywhere. Cramming everybody into a little spit of land is crazy. If you really like Palo Alto, you can vacation there. It's not a good budget choice to actually live there.
- travmatt 10y ago
  "The "drive till you qualify" and "rather a longer commute" assumptions are wrong. You don't have to work in Palo Alto. You can have a short commute if you work elsewhere." The literature I just posted wasn't from the point-of-view of the people who would benefit from affordable housing, it was from the point of view of municipalities and states self-interested in seeing returns on investments in affordable housing. Moreover, how does your logic make any sense at all? If you work in Palo Alto and don't need to travel far, you can be said to have a 'short' commute. If you live further away, then the commute is necessarily 'longer'. If you change jobs -> then the job you left will probably be replaced -> if the job is replaced at the same wages, the person being hired either has to live in an area their wages can't afford or they'll have to commute into it, a 'long' commute and the cycle continues. Your logic really only works if you are only worried about _your_ interests, not the interests of the town itself. "This industry is totally relocatable. It's not like mining, shipping, petroleum, or even farming. Computers are available everywhere." Isn't this arguing my point for me? Unless Palo Alto was incorporated solely for the benefit of computer programmers, there are other people who have lived there and are afforded the right to vote on it's future - teachers, cops, firemen, postal workers, janitors or other professions, and these programmers surely don't operate in a bubble but utilize some type of support staff? Governments shouldn't base policy on the singular peculiarities of one profession. "Cramming everybody into a little spit of land is crazy." I'd argue encouraging urban sprawl ('drive till you qualify') is less sustainable (i.e., more crazy) than encouraging more densely concentrated living/working areas - but that's not research talking, only my intuition.