A few weeks ago, I wrote a post about investors gobbling up Irvine’s most affordable housing. Many of these investors have the means to make the purchase an all cash transaction. This is appealing to banks and homeowners; however, it plays havoc with the housing market ladder.
The housing market ladder is often cited as a basic component of a housing market that is functioning in a healthy manner. The theory of the housing market ladder goes like this: Those with limited incomes buy into the housing market by purchasing a home that is priced at the low end for that area. This allows those who could not otherwise afford to buy a home to become homeowners and, as equity and incomes increase, move up to a higher-end home.
With investors purchasing so much of the affordable housing in Irvine and other southern California communities, the path to homeownership is blocked for many. As one of our Astute Observers commented, this is a problem: “GREAT! Investors are buying up ALL the ‘affordable’ housing. In case you missed it, the goal of affordable housing is so that first time buyers can enter the market, create some equity, and eventually move up within the community. So….who is going to buy all the $600K stuff being built?”
So what is the answer for those who want to get in on the housing market but can’t manage the all cash purchase? I’m not sure, but following is a look at some of the efforts that are going on in Irvine to help provide affordable housing. Irvine’s goal is to have 10% affordable housing by 2025. The video gives some insight on this:
Following is more information on how the city plans on achieving its affordable housing goal. This text is taken from City of Irvine 2008-2014 Housing Element. Note that California communities are required to have a housing element that is updated periodically and approved by the state. The Irvine city staff is currently working on the next housing element.
In March 2003, the Irvine City Council approved a zone change to revise Chapters 2-3 of the Zoning Code to require the provision of affordable housing in all residential development and outline the means of attaining affordability. These provisions are applicable to all residential developments of 50 or more units, regardless of zoning, within the City of Irvine. Under these provisions, residential projects are required to provide a minimum of 15 percent of their total units as affordable units and shall be allocated in accordance with the following percentages:
• Five percent of the actual number of dwelling units shall be affordable as rental or ownership units to households earning less than 50 percent of the County median income.
• Five percent of the actual number of dwelling units shall be affordable as either rental or ownership units, with the emphasis on ownership units, to households earning 51 percent to 80 percent of the County median income.
• Five percent of the total number of dwelling units shall be affordable as rental or ownership units, with emphasis on ownership units in projects offering ownership housing, to households earning 81 percent to 120 percent of the County median income.
Irvine’s Housing Element goes on to give more details on how the affordable housing goal will be reached:
To make adequate provision for the housing needs of all economic segments of the community, the programs in the Housing Plan aim to:
• Provide adequate sites for the development of affordable housing
• Assist in the development of affordable housing
• Conserve and improve the existing affordable housing stock
• Preserve units at-risk of conversion to market rate uses
• Address and remove or mitigate constraints
• Provide equal housing opportunities
The City has also adopted the ambitious goal of creating 9,700 units of affordable housing by the year 2025, representing approximately 10 percent of the City’s total projected housing units. In order to achieve this goal, the City completed a Housing Strategy and Implementation Plan to clarify and expand its housing goals, propose an affordable housing strategy for the City, and offer an implementation plan to put the strategy into action. The Housing Strategy presents the following goals and priorities:
• Maintain the high quality of both new and existing housing
• Disperse the affordable units throughout the community
• Incorporate green design/sustainable development and accessible development features to improve affordability and contribute to resource conservation and accessibility
• Facilitate development of additional rental housing
• Create equity-building opportunities for first-time homebuyers
• Partner with Irvine’s colleges and universities to create additional faculty and student housing
And for those who are concerned that affordable housing in Irvine might be a blight:
“Substandard conditions and the need for rehabilitation is not an issue with the City’s affordable housing inventory since units are well maintained by property owners. Moreover, like the rest of its housing stock, a majority of the City’s assisted units are fairly new and in good condition.”— City of Irvine 2008-2014 Housing Element
Note: These bullet point tactics for achieving the city’s affordable housing goals may change with the approval of the next housing element document. The city staff is currently working on Irvine’s next version of the housing element, and discussion of the upcoming housing element will be part of the city council’s agenda in the near future. Periodic updating of the housing element is a requirement of the state of California.
Discuss below or on Talk Irvine.