Chalk this report released by SWRPA as stating the obvious. As real estate prices have shot up in the last few years, the affordable factor in housing disappears. And that’s what the report basically says in today’s Advocate. One solution, the report states is to encourage 40 year mortgages:
The study recommends state and local governments pursue density bonuses and other incentives for developers to create affordable housing in those areas.
Other recommendations include SWRPA becoming an affordable housing information clearinghouse in its role as the region’s main intergovernmental planning agency, and urging lenders to create more flexibility in mortgages so home buyers can borrow more within acceptable limits.
Carty urged caution on increasing the percentage of household income that lenders allow to go toward mortgage and housing costs, saying that was part of the problem that has led many less-qualified borrowers into default in the current subprime mortgage crisis that has roiled the stock markets.
“You don’t want people one paycheck away from disaster,” she said.
Instead, lenders should consider 40-year mortgages, which spread out payments for much longer. Buyers don’t build equity as fast, she said, but they can afford much more home in an expensive market.
Why stop at 40? The reality is that home ownership, for a 40 year mortgage is essentially renting. No one in the housing industry will likely admit that.
source: Advocate , , Study cites decline in affordable housing along ‘Gold Coast’, By Doug Dalena, August 22 2007
