| More Communities Reconsidering Affordable Housing Requirements|
|As the nation's economic recovery grinds slowly on, communities across the country are reevaluating their approach to everything from pensions to public parks. Most cities and states are facing significant budget shortfalls, and the economy's sputtering upturn is forcing public officials to make difficult decisions. More people than ever are in need of government services - everything from unemployment checks to housing subsidies - but governments have less money with which to offer services. As a result, nearly every service and program is on the proverbial table - including affordable housing.|
An increasing number of communities are choosing to temporarily suspend, or permanently eliminate, their affordable housing requirements. Most local governments require housing developers to include a certain percentage of affordable units in any new multi-unit project. Percentages range from five to twenty. Developers have begun pushing back on those requirements, pointing to the sluggish housing market and the burst bubble that flooded the market with millions of foreclosed properties. They argue that home prices are low enough, and foreclosed houses cheap enough, to address a significant portion of the affordable housing needs in most communities.
However, foreclosed homes are rarely a viable option for low-income residents, as they are often in significant disrepair, and some are not even livable. So, while the purchase price of a foreclosed property could be a low as $20,000, it may require tens of thousands of dollars in repairs and upgrades. Unless the house's appraisal is high enough to cover both the purchase and rehabilitation of the home, foreclosures are not viable options for many low- or moderate-income families.
However, housing prices have dropped so much that home ownership is available, in theory, to a much wider range of people now than just a few years ago. In Davie, Florida, for example, the average selling price for a home has dropped from $390,000 to about $175,000.
Davie is the latest community to suspend its affordable housing requirements, citing reduced home prices as its primary reason. Despite dropping prices and a nearly saturated housing market, however, recent studies have found that - nationwide - there is still a significant shortage of affordable housing. While purchase prices have dropped, rental prices have not. A recent Harvard study revealed that over 10 million Americans spend at least half their income on living expenses (rent and utilities).
Those who advocate for low-income residents have consistently questioned community decisions to suspend affordable housing requirements, often preferring a reduction rather than outright suspension. While it is true that home prices have fallen, they are still out of reach for many families, especially those facing unemployment or underemployment.