Common sense would dictate that the more people who can afford to buy a home, the greater the demand will be for houses and the more prosperous the housing market will become. Right? Conversely, the fewer people who can afford to buy homes, the lower demand for houses will be. Three very interesting and informative articles were posted over the last week regarding the affordable housing issue. Well, they should be interesting to anyone who has questions regarding the future well being of the U.S. housing market. While most people will agree the market’s definitely seen better years, there seems to be widespread theories and finger-pointing within the housing industry itself as to why housing markets everywhere are suffering. Could one of the root causes of our downward-heading housing market be as simple as the U.S. has a serious shortage of affordable housing?
Why are we short of affordable houses?
Blanche Evans, long-time columnist for RealtyTimes.com, took an in-depth look at the role builders’ play in the housing market. The article’s focus was the recent stock market plunge and its link to the downturn in the housing market. While builders blame scared equities investors and “bad housing news” in general, Evans points out the following: the rampant construction of oversized, upgrade-rich, luxury homes (“McMansions”) far outstrips the ability of many of today’s families to pay for such homes. As family sizes decrease and heads of households are increasingly single, why do builders insist on saturating the market with McMansions? “Stock holders demand ever-increasing results,” she says, and builders have developed “a star-wars determination to top each other with bigger and better, instead of [producing] what mix of housing will benefit the community most”. (RealtyTimes.com, 30 July 2007)
What can real estate agents do about it?
On 23 July 2007, Sara Weis of the National Association of Realtors® posted an article on Realtor.org relating its recent designation of Boulder, CO, as the 2007 Ambassador City. Along with the U.S. Conference of Mayors, the NAR honored the city and its local Realtor® Association for their work to bring affordable housing to Boulder families and to promote homeownership. What did the Boulder Area Realtor® Association (BARA) do to earn this distinction? They teamed up with their city, the Affordable Housing Alliance and Wells Fargo Bank and held a raffle for a children’s playhouse. The kickoff for a project they call Southern Lights, the raffle helped raise almost $25,000 of seed money that was put toward the construction of two duplexes. More than 100 BARA volunteers gave labor hours toward construction. The city’s Department of Housing and Human Services screened and selected the families that purchased the duplexes, who were also required to contribute labor hours to construction. The units were sold well below the area’s median sales price; the buyers had to meet the city’s low-to-moderate-income range. Restrictions placed on the property will make these units permanently affordable.
Why should agents and other real estate professionals care about affordable housing?
It seems obvious that by making affordable housing a priority, real estate professionals will create a multiplied benefit. By participating in and pushing for legislation and local building activities geared toward quality housing that is affordable to a greater number of families, they will be extending homeownership possibilities to a greater percentage of people, thereby creating a larger prospective market for realtors’ services. And, studies are showing that affordable housing may even create long-term solutions for the ever-growing problems of health care, education and related financial markets.
MarketWatch.com (Amy Hoak, 26 July 2007) publicized the recent findings of studies performed by the Center for Housing Policy and Enterprise Community Partners. The reports found that affordable housing had far-reaching and positive effects on families’ health and education. The researchers involved in the development of these reports “hope that [the findings] inspire affordable housing to become a ‘first-tier’ issue in the presidential campaigns and in public debate”. Affordable housing allows families to put more money toward health care and food; alleviates crowding, thereby reducing stress and the spread of infectious diseases; promotes stability in living environments, causing fewer moves and increasing children’s academic success. Children of homeowners are more likely to graduate high school by 19 years of age, stay in school longer than children of families who rent, score higher on math and reading tests than renters and tend to be healthier, with fewer instances of high blood pressure, depression and long-term illnesses.
With just a bit more research, one can find much more said about the benefits of affordable housing…and the shortage of such housing in most U.S. cities. Creativity and determination are the key factors in bringing about the kinds of changes needed to make “luxury” living available to the people who can reasonably pay for it, while making greater numbers of quality, affordable homes available for the majority of families who neither want nor can afford McMansions. If there is any profession out there where “creativity” and “determination” are part of the job description, it is in real estate services.
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