"Affordable Housing" It Will Just Blow Your Mind

A tragic story out of West Springfield brings to the forefont some of the decisions, which have been being made by state housing officials for years. In the article it is reported that "28 rooms in the Clarion were rented by a state housing assistance program."

If you check the Clarion website you find the cheapest rates at the West Springfield site is $79.95 per night (5 night stay). A one month stay, about $2,400 per room, could rent at least two apartments in the surrounding community. The full cost of the 28 rooms, about $67,200, could house more than double the people served for the cost.

The Boston Globe has also reported on these expenses, A room to call home. The Globe reported that the state was spending on average $85 per night for rooms, and people were staying for as long as three months. At a expense of $2 million per month - $2,663 per month per family. The Globe goes on to point out that these situations lead to increase crime calls (MassLive reports gang members taking advantage of the rooms), and safety violations.

While many people simply oppose affordable housing programs, the vast majority understand the need to meet the needs of those in need. However, waste, such as is illustrated in these two stories lead to outrage that ripples into opposition to all efforts. Understandably, emergency shelter is needed, but the goal needs to make these stays as short as possible - perhaps stays as short as one week, moving people to permanent housing in days, not months.

Replace The Citizen Volunteers With Paid Professionals? A Bad Idea.

Ray and Maria Stata Center, designed by Frank Gehry, photo from (Harmony and Home)

Planetizen had a link to the following article out of England, Amanda Levete: why architects know best. The article suggests that architects should be making all land use decisions and that planners, in particular citizen planners, were not capable of making sound decisions.

The proposition that citizens cannot make the appropriate decisions for their communities seems outlandish. As a professional planner, I feel properly versed in advising my citizen planners on local committees. However, only having a professional attachment to the communities I have either worked in or for, I would hardly feel positioned to be the final arbiter on the tastes of the community.

I have worked with many architects, as with most professionals, they have their beliefs as to what is best. These beliefs often do not mesh with zoning controls or neighborhood style. Even the article suggests that contemporary style is lost under the current citizen planning regime. Perhaps, contemporary styles are not what the community wants, but instead wants to connect with its historic style.

I also found it interesting that this article came out about the same time the Boston Globe Magazine ran the following, In praise of ugly buildings, an article about how the much detested architecture in downtown Boston represented the "contemporary style" of its era.

Housing Recovery - A Plan

Maybe I am becoming more bleeding heart as I get older, or maybe it is just my sense of moral outrage is growing. Today's Cape Cod Times included a story, Foreclosures rising on Cape, that illustrates the problem with the current bank bailout plan.

GMAC Financial Services has received $16.3 billion in banking bailout financing. Essentially you and I paying them for their losses on loans. That funding has not trickled down in any fashion to the homeowners who have really suffered the losses. Losses in jobs and home value due to bank and speculator fraud. Bank fraud due to deceptive lending practices and predatory lending. Speculators, as they artificially drove up home values.

I cannot find any specific values related to GMAC's bad loans. One discussion suggests it is about 10% of its $189 billion in assets. If we took this $19 billion in bad assets and considered most of these, while losing value, still held some value (the foreclosure sale price), the government bailout money would seem capable of opening the door to mortgage re-writes and principal reductions. The end result is a program that supports the banks and the property owners. With the $16.3 billion government gift to GMAC being used to support the real estate market and not to reward business executives who managed to dump their bad business decisions onto all of our banks.

National Housing Policy - Redux

In my post below, I had stated that the bank bail-out would have provided a better service to the country if the funds had actually gone towards paying off a portion of the balance of mortgages that were in default. Such a program would have allowed people to stay in their homes, rather than being forced out - and either leaving empty bank-owned properties everywhere or dumping homes on the market at deep discounts. Today I saw the following New York Times Editorial (from January 4th) This Year’s Housing Crisis. Quite clearly the commentators I was responding to - those supporting booting people out of their homes - are not gaining mainstream support. Unfortunately, neither is a housing program based upon saving people and their homes.

National Housing Policy

The following article from the NY Times January 1, 2010, U.S. Loan Effort Is Seen as Adding to Housing Woes , is one of several recently critical of the federal homeowner "bailout" program. The program provides $75 billion to rewrite and restructure home loans in danger of foreclosure. This amount, while quite substantial, is small when compared to the $700 billion bailout provided to banks, Oversight of Bank Bailouts Criticized, to address esentially the same mess.


The banks, essentially, were provided funds to cover bad debt from the mortgage meltdown. The homeowners, (in perhaps a simplistic vision) many whose debts were probably part of the ones banks were bailed out of, were provided the opportunity to re-write their loans. Little, if any, of the actual debt has been forgiven.


Now, we are seeing comments from banking and real estate interests condemning efforts to help these homeowners. The suggestions are that the government should allow them to fail, arrange short sales or allow people to surrender their deeds to the banks. Basically, they are suggesting we get to the end-game quickly so that the building banking community can get back to work.


What's wrong with this picture????

• As many community governments and residents can attest, banks are very poor property managers. Allowing vacant properties to become eyesores and neighborhood problems. (see Foreclosures spur neighborhood ghost towns)


• Foreclosures and short sales will further pull down property values, once again affecting the next round of properties.


• Where exactly will the builders find customers for new homes if an additional glut of housing is dumped on the market?


• Will we need yet another round of bank bailouts to recover from this idea?

Let's take a look at a few numbers, and draw a few conclusions. American Factfinder reports that there are 127,762,925 housing units in the United States. Of these, 75,363,085 are owner occupied. Of the owner occupied housing units 51,487,282 units carried a mortgage in 2008. Finally, the median value of all owner occupied housing was $192,400.

A HUD report, cited in Foreclosures in Rural America? Who Knows!!, reported that 5.3 million homes, or 10.8% of those carrying mortgages had been "in some state of foreclosure" in either 2007 or 2008.

Working off of the median value of homes nationwide, the total value for all foreclosures would have been a bit over $1 trillion. I have not been able to find any solid numbers but, if the total value of properties in arrears is in the $1 trillion range, and foreclosure starts within a few months of the first missed payment, the actual value people are behind on mortgages is considerably below the full value of the properties.

So, with $775 billion to bailout the housing market, a program to actually pay off the arrears on default properties, and restructuring mortgage balances may have been a better and cheaper long term strategy. Of course, strings would need to be attached to such a program, such as restrictions on re-sale without some level of government repayment, restrictions on refinancing to cash-out equity, and other credit management strategies. However, the strategies would be designed to keep people in their homes, not evict them.