The City of Irvine is conducting a Residents’ Survey to see what residents think of how the city is doing, the website, fake grass, etc. I believe they did a similar survey last year.
If you’re an Irvine resident, I encourage you to fill out the short survey:
One of the topics in this survey is about affordable housing in Irvine. Did you know “that the City has set a goal to ensure that approximately 10% of the total housing in the City by the year 2025 is affordable and remains so in perpetuity?”
As I understand it, affordable housing can be one of two things
- homes that are sold at below market prices
- apartments that are leased at below market prices
Let’s discuss affordable homes first. Would you like it if you paid $600k for your home and someone purchased the unit next door on the same day and paid only $300k? Believe it or not, scenarios like this have already occurred.
What about affordable apartments? Did you know that Woodbury contains some affordable apartments (here)? I think that any residents of these Woodbury apartments also have access to the Woodbury Commons – an area that Woodbury homeowners shell out mucho $$$/month for maintaining.
There are many things about the City of Irvine that I like but affordable housing is NOT one of them. I believe housing in Irvine is overpriced but I also believe in a free market. I may not make 200+k/year but I don’t have a family of 8 with an income under $25,000 either.
Anyone else feel this way?
Question #1 – Who pays for the benefit of affordable housing? If the builders have to set aside x% of the land for it, do they jack up the price for everybody else to make up the difference? In that case, I’m certainly not happy about subsidizing it. If the city pays for it, then all taxpayers (mostly homeowners) are providing the benefit. It still sucks, but the hit is spread out over a larger base vs. just the homeowners in the development. The 1.8% tax rate and mello-roos already make homeownership a burden for everybody. BTW, the 1.8% hit on an average home in the new developments was more than my old 2002 mortgage payment. It seems like affordable housing will make it worse.
Question #2 – What restrictions are there on for the lottery winners – the lucky owners of affordable owners and not the renters? Can they flip it at market value and pocket the difference? I think there are lawsuits in Orange County on this issue already. In all fairness, the affordable owners shouldn’t be entitled to extraordinary gains. The city should take back the affordable value difference plus a prorated share of any appreciation (none for the next decade) when the house is sold. Of course, it means that the affordable owner will probably never move, but they already are living the benefit.
Affordable housing is like another version of rent control and bad economic policy. Yes, Irvine is not affordable anymore, but that is a failure of the regulators and the self serving REIC. Let the bursting bubble run its course and housing will be affordable again.
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I believe there are rules that disallow the affordable owners to flip it at market prices. I think if the affordable owner wants to sell, it has to be sold to someone that qualifies for affordable status AND at a price that’s tied to some index.
Affordable housing sale and resale are tied to a pre-set limit on percentage of income towards mortgage payment. The actual amount required varies based on size of family. In our development it will last for 40-years before full resale value can occur. Thus, subsequent owners must qualify for affordable housing.
In our neighborhood (Tustin) the affordable housing folks pay anywhere from $90K to $310K. Albeit, they live in smaller (1400-1600SF) homes versus the normal priced larger homes (2700-3500SF) which run $1.0-1.3M.
I was surprised to find a neighbor down the street paid $92K for her house (she lives alone) and her income is below $40K.
I worked hard and paid an arm and a leg to live in a nice area. As much as homes are overpriced, is it fair that another family can move into the neighborhood without paying the sweat equity?
This is a tricky issue because housing is filled with complex subsidy and public policy issues.
Anyone who buys a home in the U.S. lives in subsidized housing in the sense that the interest rate deduction benefits people enormously, especially in high cost housing markets. That is one reason why the National Association of Realtors screams bloody murder every time a politician so much as questions the deduction for mortgage interest. Is the deduction “fair?” Well, it certainly encourages home building and home ownership, but that doesn’t make it “fair.” We have it for public policy reasons – home ownership is good, it allows people to build equity, employs a lot of people, etc. It really isn’t fair to people who don’t earn enough money to benefit from it, but who are taxed at a higher rate than they would be if the deduction did not exist. Should someone buying a $3,000,000 house basically get government help to buy it (in the form of deductible interest and property taxes) while someone making $40,000 is priced out of the market?
In a radically libertarian society we wouldn’t have subsidized housing…but we also wouldn’t have a mortgage interest deduction, public education, zoning laws, etc. I don’t see us moving in that direction anytime soon.
There are two solutions: eliminate tax deductible interest and eliminate subsidized housing. The first will NEVER happen, so subsidized housing exists as a crude and flawed way to equalize things.
I favor giving every taxpayer a flat rate housing credit. The poor would then have some money for housing. Wealthier people would, of course, add their own money in order to buy their nicer homes. Not a perfect solution, but better than what we have now.
Before you call me a socialist, remember that I am calling for doing away with a government benefit.
Are Bears right wing, left wing, just a bunch of wing nuts? It all comes down to equality…is this society just about money now? You people complain because housing prices are too high…please, please let the median drop to $300K so I can afford it. But, if someone who does, lets say, a job like police officer, teacher, social worker, etc. wants to live in your neighborhood it’s “no, they have to pay there way in”. Uh, isn’t that what current bubble owners say about the vocal minority pulling for a housing crash?
Americans talk a good game about equality, yet, we do not have equal access to quality schools, homes, jobs. As a people, our values are so beneath our rhetoric, there isn’t a machine invented to measure the distance. And sweat equity, please. So many soft oc’ers couldn’t do any type of blue collar physical labor that if the apocalypse comes, OC residents (especially of the South OC kind) will be the first people to perish because they wouldn’t have any of the skills to survive. Sweat equity, that’s a rich one.
I paid full market for my home but do I resent anyone who gets a subsidy or who pays less then full price. No…why? Because if it gets a child into a good school so they become a productive member of society then it benefits everyone. If one more person can live closer to their job and reduce traffic and air pollution while spending more time at home then it benefits everyone. If a family can live in a home instead of a motel and provide some sort of security to that family then it benefits everyone. But I guess, believing in programs that benefit everyone is so passe. It is now every man for himself.
I was starting to believe that you bears really believed in lower home prices for the benefit of that “common” person you always talk about. But really, you are just out for yourselves. How are you any different then the flippers?
Great post, I agree 100%
How does it benefit everyone to reward one with “affordable” housing while others are working 2 jobs just to make ends meet because they paid full price for a house. Screw this whole “lack of opportunity” crock, because if someone has the will to work hard and succeed they will find their way to it. My parents came to this country with nothing, but they made the right decisions–they didn’t have kids as teenagers, they worked hard, worked jobs to pay their way through school, didn’t rely on the government to take care of them, etc. Affordable housing is in the same bucket as all other junk that tries to mess with a free market–garbage.
The same with affirmative action–why should one kid who works hard, takes AP classes, gets great grades, does well on SATs, etc. not get into a school while another kid of “color” who has lower grades, doesn’t do as well on SATs, doesn’t take AP classes get in? I saw this happen back when I was in HS, and although it didn’t affect me it sure as heck ticked me off to see friends get rejected while others who worked half as hard get rewarded.
William,
The last major overhaul of the tax code was the landmark Tax Reform Act of 1986. Since then complexity has crept back into the code. Last year, the President’s Advisory Panel on Federal Tax Reform made some thoughtful suggestions on simplifying and streamlining the tax code and made some courageous suggestions regarding housing before the REIC screamed bloody murder and killed it. When the Alternative Minimum Tax starts to impact greater number of Americans (Californians and other residents of high tax states especially) taxpayers will finally start demanding substantial changes. The legwork has already been done.
“… there is a question whether the tax code encourages overinvestment in housing at the expense of other productive uses.”
“The tax preferences that favor housing exceed what is necessary to encourage home ownership of help more Americans buy their first home. For example, the $1 million mortgage limit may encourage taxpayers to purchase luxury residences and vacation homes. In addition, the deduction for home equity loan interest may encourage taxpayers to use their houses as a source of tax-preferred financing for consumer spending.”
The Tax Panel consequently recommended replacing the mortgage interest deduction with a tax credit limited to 15% of a loan balance between $227,147 to $411,704, which represented 85% to 90% of mortgages originated in 2004.
“In addition, the Home Credit would reduce the incentive to take on more debt by eliminating the deduction for interest on home equity loans.”
“The Panel recommends that the length an individual must own and use a home as a principal residence to qualify for the tax exemption be increased from two out of five years to three out of five years.”
OK… whew. I live in Massachusetts, so the rules are a bit different here, but I lived in Irvine in 1991-1996 and grew up in San Diego, so…
The person who pointed out that it’s a problem when *valuable civil servants* like teachers, police, etc. can’t afford to live in places like Irvine is on to something. When we talk “affordable housing” we are not usually talking housing projects; we can be talking housing for hardworking people who for whatever reason aren’t earning the $100K or more salary required to buy at market rate in many areas. In my area, “affordable” housing means housing available to those with family incomes of $40K to $80K per year, depending on family size. These are not lower-class folks we’re talking about, but they have *no* chance to buy at market rate unless they take on suicide loans.
In MA, “affordable” housing is often a response to towns’ efforts to keep families with children from moving in, because children cost a town money. NIMBYism is huge here. What we’ve ended up with is a lot of 1-acre zoning, which means houses starting at about $650K, and *no* starter homes. Even condos at $300K and up are not affordable for your average schoolteacher. We are also facing a declining population because of the cost of housing; a lot of young families, even with well-educated professional parents, just can’t afford to live here. One solution — which is unwieldy and imperfect as most government programs are — is to allow developers to get around town zoning laws if they put in a minimum percentage of “affordable” units — in towns that have less than 10% “affordable” housing. Affordable means “affordable by someone making 80% of the median income for their family size.”
The towns scream bloody murder, of course, and things can get really ugly. In my town, a group of residents on a cul-de-sac spent years battling Habitat for Humanity over building two “affordable” single-family homes on their street. Affordable here meant a 3BR 1800 sq. ft home on a half-acre lot for $250K — not a slum! But when the rest of the neighborhood is 5BR 3500 sq ft. homes on acre lots, people get all up in arms. (H4H won, by the way.)
Of course none of the posts here surprise me at all; I was a grad student at UCI in the early to mid 1990s and heard horror stories from grad student parents who lived in on-campus apartments and sent their kids to Irvine public schools. Turtle Rock Elementary (where most of the kids went) was especially horrid. Their kids were persecuted because they didn’t have the latest clothes, toys etc. “No poor kids allowed in Irvine!” was the general feeling. Some parents got false addresses in other Irvine neighborhoods that didn’t have as many rich kids, so they could send their kids to schools where they’d be closer to “average.”
You would be surprised at what qualifies as low income. A first year Deputy Attorney General (yes, a lawyer) makes only $37K a year. I don’t think you would suggest that those who went through 4 years of undergrad and 3 years of law school (and likely have student loans to boot) are not hardworking. Other low income “slackers” include, school teachers, firefighters and police officers.
There was a story in the news recently about how Santa Barbara falls behind the curve in fighting larger fires because of the distance off-duty firefighters have to travel when called in on an emergency because they cannot afford housing locally.
I suspect the real resentment comes from folks who don’t qualify for low income housing, but can’t afford a house under current market conditions. Frankly, you should be angry that economic conditions have *not* been good for moderate income earners over the last 30 years, but bickering over the crumbs only prevents you from focusing on and working on the real problem.
Thanks ocjohn, for your thoughtful reply.
I strongly doubt that the tax deductible aspect of mortgage interest will be substantially altered, though I am not good at predicting the future.
The problem isn’t economics or efficiency, it’s politics. Too many people have a vested interest in the continuation of that mortgage interest deduction for it to be phased out, diminished, etc.
Thanks for pointing out that the deductibility is limited to $1,000,000, so my example of someone buying a $3,000,000 home does not benefit that much. Still, $1,000,000 is a lot of money. Someone making, say, $250,000 a year benefits in buying a $1,000,000 home while someone earning, say, $60,000 finds it almost impossible to buy in this market. That is, of course, why housing prices have to come down. It’s also unfair, though, just as it’s unfair that a low-income person can buy in your neighborhood.
Upper class and upper middle class people like to believe that they earned everything the “hard way” while poor people have everything given to them. The truth is far more complex. There are a large number of government policies that favor the well-to-do. They may make sense from a public policy standpoint, but they are hardly “fair.”
Thank you William for your thoughtful responses.
There is a lot of ignorance from the “no affordable housing crowd” and a lot of unanswered questions.
To the Anons and Sweat Equity above, first, who gives away housing? Most affordable housing is based on income and a means to pay. It is also 95% rental and very little homeownership because developers, even with the LIHTC they cannot make the numbers work. Why should someone (and their kids) who works a hard 40-50 hours be relegated to the slums? What is the problem with living in a mixed income area? So you work hard and paid more for a house then a struggling single mom. Do you really want to trade lives with her? And whining about entitlements is certainly the pot calling the kettle black. Don’t the Bears feel they are entitled to a 350K beautiful South Oc home instead of a million dollar cracker box?
Hey, whether you like it our not we are in this together. If someone lives in my neighborhood and they paid less who cares…what is so terrifying about living in a mixed-income area? Again, if it helps their kids get ahead in life so be it. I do not want my kids to be sheltered, I want them to be exposed to people from all walks of lives. See the Coto crowd from the Real OC, I would never want my children to turn out like that.
I’m providing for my family, I’m enjoying my life, I could care less if someone less fortunate gets a break to get ahead. Because I’m already ahead and I’ve certainly have received more then my share of breaks especially as a white male. People aren’t asking for “entitlements”, they are just asking for an level playing field. And good housing isn’t an “entitlement”. In any civilized society, it is a right.
What is wrong is not our “entitlement nation”; it is the fact that, unlike in the past, the ones who are doing well don’t want to lift others up for the good of the Nation, nope, they want to hoard everything for themselves and the good of their “children”. Screw everyone but me and mine (never realizing that the seeds of our destruction are sowed in such an attitude). That is the true selfishness in our country.
Truly enlightened wealthy people don’t care if people get affordable housing subsidies or welfare or more college financial aid or whatever you are railing about if they are using that to better themselves, lift themselves up and if it betters society. Do some people take advantage, sure. But when we start going after all of the CEO’s making $100 million a year then I’ll start worrying about the myth (and it is a myth) of the welfare queen. I already have all of the advantages…why should the amount of money I have determine whether or not my children have a good home, school or future. If we are the greatest country on earth like we so proclaim as strutting peacocks, shouldn’t we be providing that to all of our children and not just the entitled elite?
Thanks for all the comments on both sides of this issue. I am VERY MUCH against affordable housing in Irvine.
I don’t think everyone who works in town deserves to live in town. If you can’t afford to buy a house in Irvine, TOUGH (look somewhere else)! If you can’t afford to rent an apartment in Irvine, TOUGH (look somewhere else)! Are prices too high for me to buy my ideal home in Irvine? Yes, but that’s TOO BAD FOR ME! If I WORK in Shady Canyon, does that entitle me to LIVE in Shady Canyon? I’m sure I’d qualify for affordable housing if they made it available in Shady Canyon 😉
So I suppose you think it’s just fine that your kid’s teacher might be spending 4 hours per day commuting to and from the Inland Empire. That’s going to make your kid’s teacher a high-quality teacher, ya know.
I actually expect that if the southern California real estate market corrects itself, teachers will be able to afford to live in OC again. Maybe not in Irvine, but at least in the county.
BTW did you know that some of the beneficiaries of “affordable housing” in Irvine are UCI professors? The prices of those houses above the campus are subsidized by UCI. In the late 80s/early 90s housing run-up, UCI was having a terrible time attracting and keeping professors because of the cost of housing, so they started building nice houses and duplexes (on tiny lots) on some of their spare land for UCI employees to buy. In your perfect world, I guess there would be no UCI.
(I am using teachers as an example here…)
Yup, I 2nd that…. I want a house in Shady Canyon too and a vacation home in Aspen. Hey, if the “poor” can have affordable housing, then why not have it for everyone else.
We can all feed at the trough. Free houses for everyone. Maybe not 100% free, but it might as well be if you couldn’t be there in the first place.
Spoken like a true leftist…. everyone gets a hand(out). Pennies from heaven…. wooooppeeee. Give me some too.
When will the madness end? When we all live in 3000 squares of affordable housing? What a farce. These people truly don’t need the help. What’s next? Help for minimum wage workers to buy condos? How about help for those who can’t make mortgage payments because ARMS readjusted?
I hope they put up affordable housing mix in your area (those who are propenents). I’m sure you libs wouldn’t mind your property values decreasing. Oh, maybe you wouldn’t care since that’ll “even” the playing field.
If a teacher is willing to live in the IE and work in the OC, that’s their perogative. Because, they could as easily obtain a teaching job in the IE since there is a shortage of qualified teachers everywhere. Heck, I work in Manhattah Beach, now it’d be nice if they gave me a beachfront home for the cost of a small condo because I’m entitled to work close to home.
I don’t care where you live or work. That is not my problem. That is your problem and don’t expect me or the government to bail you out.
That is nice, that UCI gave its professors affordable housing. So, to put this into perspective, my company should make affordable housing for me and other empoyees? Obscene if you ask me.
Bottom line, the market should operate without outside forces screwing with things. To add to the comments above, just because I work in Newport Beach doesn’t mean I should get subsidized to own a property a few blocks from the ocean. I would never expect that, so I don’t know why you pro-subsidy people think that it’s ok to subsidize someone to live here just because they couldn’t afford it otherwise.
Ownership is a privelege, not a right. I can’t afford a Ferrari F430, but do I expect the government to give me a 75% discount so I can? Of course not. There’s such a thing as renting in OC since you can currently rent a property for less than half of the equivalent of the carrying cost of ownership. You might say teachers, policemen, firemen, etc. can’t afford a house in OC–add them to the numerous others who can’t afford one. How do you expect to judge someone’s right to a subsidy vs. not? Bottom line, affordable housing is a broken concept.
“So I suppose you think it’s just fine that your kid’s teacher might be spending 4 hours per day commuting to and from the Inland Empire. That’s going to make your kid’s teacher a high-quality teacher, ya know.”
Yes, that’s fine with me. If this teacher decides to buy a house in the IE and have a 4 hour commute each day as opposed to renting somewhere in the OC and having a 30 minute commute, that’s their decision.
“BTW did you know that some of the beneficiaries of “affordable housing” in Irvine are UCI professors?”
Yes, I am aware of University Hills. There are some issues here as well.
so what these a-holes are now saying is that if I busted my ass for the last 15yrs in my education and career and make a six figure income I still cannot afford to live in Irvine whereas the delinquent who makes $30k is able to live in Irvine because his housing is subsidized? What is this world coming to! 🙁 Sounds like a socialist state to me.
Beware the lack of facts about affordable housing. The State is the drivert behind these programs, and they are full of restrictions. The Tustin program is a prime example. There are strict income limitations to qualify, and the maximum you may spend on housing is 35% of your income. The Tustin program actually excludes many people who are income qualified due to the very high HOA fees and taxes. In my friend’s case, he made just under $65k, so he was income qualified to purchase one of the Tustin affordable homes. The affordable price was $302,400 for a home that had a $677,000 market price. However, due to the large HOA fees and taxes, he was required to come up with $148,000 for a down payment – which had to be a gift from someone (if he had $150k in the bank, he wouldn’t qualify for affordable housing). Due to the 35% of income cap on housing costs, he could only spend $1000/mo. on a mortgage – even though he could well afford to get a much larger mortgage. This programs ARE gifts, but not to real low or moderate income folks. Anybody who has a family that can give them $150k for a house will get these gifts. What a crock!
http://www.cityofirvine.org/civica/filebank/blobdload.asp?BlobID=8845
http://www.cityofirvine.org/civica/filebank/blobdload.asp?BlobID=8402
Ooh, the L word. The first retort for people without a solid argument. Robert Frost wrote “Education is the ability to listen to anything without losing your temper or your self-confidence”. Looks like there are a lot of uneducated bears out there.
First, I never said ownership is a right, I said a decent home was. Please argue that no one has a right to a decent home. And if you do, I’ll promise I’ll read it before taking a shower. Remember what Jesus said: “Whatever you do unto the least of these, you do unto me.” (Matthew 25:40)
And I never said give everyone a handout, sheesh, do bears not take reading comprehension classes in their private schools? My argument from the beginning is that all hardworking people deserve a good home.
Oh, and now the argument is if you can’t afford to live here move away? Again, isn’t that what us homeowners say to you bitter renters? Hmm, what’s good for the goose and all that. And that is rich, comparing a luxury-Ferrari 430 or Shady Canyon mansion, to a basic quality of life-a good home. Didn’t anyone here take a basic logic or rhetoric class? I was hoping for some good give and take but I’m getting nothing but cliches and comparing apples to oranges. No one deserves a Ferrari or a Shady Canyon mansion, but yes, everyone deserves a decent home/apartment/condo whatever.
Yes, you are all right. The market should decide everything…so, no more complaining about flippers? That’s market driven. Is it okay to get rid of the mortgage interest deduction? While we are at it, not only the LHITC but all government subsidies for builders including redevelopment agencies? No more property tax deductions either? And guess what will the market do, what they already do, overbuild luxury homes. Gee, the market is always right…how about that Energy Deregulation?
What I’m curious about, is since every society needs various levels of workers, why the intense opposition to housing those workers? It makes no sense when in the long run, everyone makes out a winner. Society gets productive workers and stable families, the market does what it does in the homeownership market, traffic is reduced, environment is marginally better. These affordable renters are no competition in the homeownership market so there is no effect for people like me.
Answer this question, what are you afraid of by having people who are less fortunate having a better chance to compete? Are you worried that they just might be as smart as you, harder working and if the odds were even you or your kids would lose? Does having a rigged game make you sleep better at night?
And here’s another question, in the real war we are facing (the economic one, not the made up terrorist one), we are out-manned by China (1.2b pop)and India (1b pop and growing). More college graduates, more engineering graduates, more science graduates. Why, in this war, do we want to waste any precious resources? Everyone in this country needs to be developed to their full potential if we are to win.
Good thing your viewpoints are in the minority. Prop 46 passed in 2002 and Prop 1C will pass this year. Irvine will add another 9700 affordable units in the next few years. That’s nothing to be ashamed of, that’s something to be proud of. And if yu don’t like it, why don’t you move out of Irvine? Mission Viejo will certainly welcome you.
BTW, in the 60’s, 70’s and 80’s there were some brilliant conservative writers who advanced conservative ideas with the end result being the so-called Reagan Revolution. If you are going to respond with just the L word don’t bother. Give me a comeback using true conservative ideals and not Fox News talking points. And remember, the LIHTC system was a conservative invention…give tax credits to builders instead of subsidies to participants. Generally regarded as one of the most effective government programs in history. Give me the argument about why that is now discredited? And since I’m partly arguing that the overall economic benefits of affordable housing are the reason why we should do it (another conservative idea), give me a lucid argument about why that is not the case? Maybe I’m wrong, maybe you can convince me…but trotting out the L word, please…I read both conservative and liberal publications and I know when that prejorative is dropped, it usually means the extreme right has lost the argument.
No one wants to talk about the tax subsidy that buyers get…but it’s an issue!
I will say it again. The government helps people buy a home by allowing them to deduct the interest on a house. On a $1,000,000 home that is a huge subsidy. Also, you are allowed to write off property taxes on your federal tax return. On that $1,000,000 home, assuming a tax rate of, say 1.1% of the cost, that amounts to $11,000 a year tax deduction. Assuming a 30% federal tax bracket, the government is giving you $3,300 per year.
The interest subsidy is much bigger. An $800,000 mortgage, at 6.5% interest for 30 years, has an annual payment of about $60,678. In the first year most that is interest (about $51,700). Again, assuming a 30% federal tax bracket, the government is basically giving you about $15,500 – just in the first year of the loan.
So…someone making $250,000 a year is given tax breaks worth about $18,800 per year to help them buy a $1,000,000 home, while the guy who makes $60K can’t afford to buy. Basically, the rich guy gets a subsidy equal to 7.5% of his income. Where is the fairness in that? This is the classic “Golden Rule” – those who have the gold make the rules.
One writer says, “No one helps me buy a Ferrari”…nope, but the government helps you buy a house that cost a lot more than a Ferrari.
We could equalize this in one of two ways – simply eliminate the deductibility of mortgage interest OR allow poor people a tax credit (like a negative income tax) that would offset what is given to home buyers. Neither one of these things is ever going to happen (politically not feasible) so we have subsidized housing. Developers who know how to built it love it, and lenders love it too.
C’mon, all you rugged individualists…stop deducting your mortgage interest and property taxes on your tax return and show that you oppose government give-aways!
Gah. Now I remember why I hated almost every minute of living in Irvine, and why, when I had the choice of a job in Southern California where I grew up and where my family lived, or a job in the Boston area where I knew nobody, I picked Boston.
Irvine was pretty, bland, and selfish as all get out. Full of Evangelical Christians who wouldn’t take “I’m Jewish” for an answer, get-rich-quick schemes on all the radio stations, snobby rich people, ugh.
Anyway, I’ll look forward to new posts about the housing market in Irvine. It’s really insane.
Oh, and to the sidelined buyer above who in his thought provoking analysis above digressed from the l word to a-hole, if you can’t afford Orange County and you are not eligible for affordable housing, why don’t you move? Sorry, couldn’t resist 🙂
I didn’t buy a house for the tax deduction. That’s like paying a dollar to get 70 cents back. Not a wise move. A house is a place to live and a purchased lifestyle, not an investment. Investments are stocks, bonds, commercial properties, etc.
If people who can’t afford houses in Irvine, but can get them from affordable housing, that’s fine. Because in the long run – their children will become part of the ownership class and perhaps create a new lineage of non-affordable housing buyers. Isn’t that what we “bulls” want for the housing market? More buyers?
My neighbors across the street are from affordable housing programs in Irvine. They are the nicest people around and very friendly. Their children have a nice and safe environment to grow up. Do we, as a society, want to raise children who respect people and properties or should we not care and let them grow up to be hoodrats?
To paraphrase a quote, “The last shall be first and the first shall be last.”
“No one wants to talk about the tax subsidy that buyers get…but it’s an issue!”
This is actually a great point that I’d never considered. Thank you for bringing this issue up. I don’t necessarily agree that affordable housing is the answer to leveling the playing field but let me dwell on it.
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If affordable housing became more prevalent in Irvine, I actually WOULD consider moving to Mission Viejo or somewhere else.
In regards to schools, the best schools are typically in the best areas and if you want to live in the best areas, you should have to PAY for it JUST LIKE EVERYBODY ELSE has to. It would be a nice world if all schools were equally excellent but we all know they’re not.
I don’t want affordable housing in my neighborhood. I don’t want a huge airport in my backyard either, even though it would benefit Southern California and millions of people. I don’t want sex offenders or drug addicts living in my neighborhood either. (Why not? Don’t they deserve to rehabilitate into society?) Sure, but not in MY backyard! 😉
If you want to fix all of society’s problem, then go pay $677k for a home in an affordable neighborhood where others are buying for $302k.
For those that are posting comments, what city do you currently live in? FWIW, I’m an Irvine homeowner.
I’m waiting for a good deal to purchase in Irvine, currently renting a home in Huntington Beach.
“Answer this question, what are you afraid of by having people who are less fortunate having a better chance to compete? Are you worried that they just might be as smart as you, harder working and if the odds were even you or your kids would lose? Does having a rigged game make you sleep better at night?”
A better chance to compete implies favoring one over another just because of what their earnings are which is messed up. I’m not afraid of competition–I’m not going to toot my own horn and I’ll leave it at that. To me, affordable housing is the rigged game–rigged to benefit a specific minority of the population. I don’t feel like I deserve anything from anyone because I worked damn hard to be the person I am today. If I make mistakes or can’t have what I want then I blame it on myself rather than relying on others to prop me up. If a family can afford these “affordable housing” units, they dang well can afford to rent a decent home in OC also.
I agree 100% with Zovall–if you want to live in the best areas you should have to PAY for it. Not get a gift from the government to live there for 1/4 the cost that everyone else is paying just because your chosen profession doesn’t pay as much as you would like. Comparing the situation to the government subsidizing a Ferrari is apples to apples because OC is one of the most desired places to live in. These subsidies imply that anyone should be able to own a home in the nicest areas which is a crock.
Who isn’t waiting for a good deal to buy in Irvine?
Affordable housing lets people other than the Chinese and white baby boomers buy a home here in Irvine. I know that is difficult to deal with, but we have to put the “others” somewhere right? That was sarcasm btw.
Have any of you watched the Irvine townhall meetings where they discuss the plans for the Great Park? The open forum was filled with employers BEGGING for more affordable housing for Irvine. Why? Because they are having a hell of a time getting employees here. Businesses need nearby housing that their employees can afford.
Forgot the other tax subsidy to home owners –
Capital gains on home ownership aren’t taxed either. This is yet another huge subsidy to home owners.
Think of someone who rode the real estate cycle up from, say, 1997 to the present. He bought a house for $200K and sold it for $650K (at the top of the market). He can pocket a huge chunk of change. The poor working slob who is saving to buy a home and manages to salt away, say, $1,000 a month ($12,000 per year) will have to pay taxes on the meager interest he earns.
So, in addition to not taking a mortgage interest deduction, or a deduction for property taxes, be sure and pay the amount you would pay in capital gains taxes to the US Treasury (to bring down the defecit a little). THEN tell me you don’t believe in govt. handouts.
For the record, I live in Andover, MA. This community is similar to Irvine; it is a generally upper-middle-class suburb with good schools and a generally high quality of life. It feels a bit more like a “community,” perhaps because it’s much smaller (35,000 people) and older (many 100+ year old houses especially in the center of town, and it’s fairly common for three to four generations of a family to all live here.)
We don’t have the insane HOAs and their rules, except for in a few condo complexes. (I still remember the woman in Turtle Rock who got fined by her HOA for painting her door the wrong shade of white! And the person who had to get rid of their kids’ backyard jungle gym because it didn’t match the exterior decor required by the HOA. Massachusetts in general is pretty anti-HOA, especially for single family homes.)
We just went above the 10% threshold for affordable housing, so the state can’t override town zoning to allow “affordable” projects. The most recent affordable development is about a mile from where I live. It’s an apartment complex with 20% “affordable” units, meaning rent for a 2 BR is about $1100/month rather than $2000/month. This complex is right next to a busy freeway and there are only a few houses nearby, most of which are older and a bit run-down.
So if all the police officers in Irvine didn’t want to commute to Irvine and chose to live in the IE, would Irvine still be a good place to live?
My idea of affordable housing.
Oh wait… Some people have families and kids. Never mind.
This topic really hit a nerve with many arguments on both sides. I believe the essence of this discussion while centered on housing deals with the redistribution of wealth or reallocation of scarce resources from the haves to the have-nots.
I think most people would agree that some redistribution is beneficial. We just don’t agree on what is the appropriate level.
I prefer less government intervention. Let the market decide instead of having the government pick winners and losers. It is less compassionate but I think more equitable. We play with the hand we are dealt with but we all have the opportunity to improve by working hard. In my opinion the more socialist models tend to restrict class movement, so the have-nots are more likely to remain have-nots.
Yes flippers are a consequence of a free market system. However, there would be a lot less flipping going on if the suggestions on the Advisory Panel on Federal Tax Reform were enacted. You only would have qualified for the capital gains exclusion in three out of five years instead of two. You couldn’t flip a McMansion because of the upper limit of $411K on a mortgage, and it would be harder to flip the second house because your cash flow situation would have been worse without the interest deduction.
Furthermore, there would have been less flipping if current mortgage laws were enforced and loan standards actually existed. The regulators are still asleep at the wheel and should have taken action well before the bubble made housing so unaffordable.
In the free market system, companies don’t have to locate in a high cost area with insane home prices that make it more difficult to attract non local talent. Nissan and Fluor have left Orange County in part for this reason.
The free market is slowly correcting the misallocation of resources into housing already, and the process will accelerate next year. Housing will become more affordable to all who had the forethought to bubble sit or just the lucky ones who weren’t in a position to buy at the height of the bubble.
Not everybody will be able to afford Irvine. I can’t afford beachfront property but I can deal with it. I’m a former Irvine homeowner and when the price is better, I’ll be an Irvine homeowner again.
ocjohn —
I’m on the other side (generally) but agree completely about mortgage rules. The amount of fraud that must be going on right now scares me. And allowing all the various suicide mortgages has driven up the cost of housing well beyond what it should be. (The same thing has happened in higher ed. The Feds raised the limits on student loans, and guess what — most universities raised their fees/tuitions to match! When an undergrad gets out with 75K of loans to pay off, it’s not a good thing.)
I have no problems with agreeing to disagree. It is bad for all of us that our current politicians can’t get along. Reagan and O’Neil made compromises and were actually friends off the Hill.
Mortgage fraud is pretty scary and apparently too easy to pull off. I think it was more a factor later in the bubble than earlier. Even scarier is that the regulators don’t appear to be that concerned because it has to be a really big case for them to get their attention. The one on this board is getting swept under the table despite the warnings. $5M fraud not big enough???
OC John,
You mean solving problems instead of mindless adherance to ideology? Hmm, that would mean spending money up front (maybe fully funding NCLB perhaps) to fully educate our populace (no unequal schools)so you don’t have to spend more money in the back end on social programs. That would mean maybe spending money on drug treatment programs instead of inprisoning simple drug users or the silly war on drugs which costs so much for so little results. That would mean making sure the oil companies pay their federal royalties and investing it in alternative energy. That would have meant actually going after the terrorists in Afghanistan (and finishing the job, especially at Tora Bora) instead of blowing hundreds of billions (Bye, Bye Bechtel) of dollars and countless lives in Iraq. But I digress, two final AH questions:
Why do the bears say affordable housing (particularly rental, the majority that is built)is not free market driven? Luxury home builders get tax credits, homebuyers get tax credits, affordable builders get tax credits. In fact, in an article in the Wall Street Journal, the CEO of Related Cos.(the biggest rental affordable builder and tax syndicator) states that the profits he makes on his affordable properties pay for the luxury properties he builds. Sounds like the free market to me.
And, if affordable housing is driven by tax credits and subsidies like other home builders are, then what is the bears real objection to it? Zovall equating affordable housing residents with an airport and drug users/sex offenders is ridiculous. There are already 4400 units in Irvine with another 9700 on the way and without checking the City website, most people don’t even know where they are at. They are afraid of something that they already live next to.
Ridiculous? Compared to some of the rants you’ve posted on this topic? 😉
I want to have a choice in regards to what happens in my neighborhood regardless of what could be considered better for more people. The airport would have benefited millions, but I don’t want it near me. The drug user and sex offender rehabilitation could be considered society’s responsibility but I don’t want that integration anywhere near me (Didn’t something like this happen in Turtle Rock last year?). Affordable housing might help people buy homes they couldn’t otherwise and live closer to work, but I don’t want that near me either.
From wikipedia: “A free market is a market where price is determined by unregulated supply and demand; the opposite is a controlled market, where supply, demand, and price are set by a government.”
You’re right, many people don’t know if they are living in an affordable housing area (I didn’t when I first moved to Irvine). If I were to buy a home, I most certainly would want to know if I was buying in an area with affordable housing.
Since so many people object to living in an area with affordable housing, yet don’t know that Irvine actually has affordable housing (and will have more affordable housing) I offer a modest proposal.
I suggest that people who live in affordable housing should be required to wear some sort of emblem or sign which will serve as a warning to all that they are “different” and undeserving. Of course, the housing itself (which now is designed to look – horror of horrors – like regular housing) should also have a different color or symbol attached to it – perhaps a giant gold star?
For anyone too dense to understand, this proposal is intended as satire.
So far, none of rugged free-marketeers appear willing to give up his/her housing subsidies – interest deduction, property tax deduction, capital gain exclusion, etc. It’s the old double-standard – “my” subsidy is wise public policy – your subsidy is a give away to the lazy and undeserving.