Why do we have affordable housing

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Presentation by Rick Jacobus to the CA League of Cities

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. Rick Jacobus Burlington Associates www.rjacobus.com

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What is the purpose of affordable housing?

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Shelter Public Health Child Development Revitalization Economic Development Traffic Management What is the purpose of affordable housing?

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VS Is the problem permanent?

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“It would be wrong to let homeowners walk away with large windfalls when there are so many others who will never have the chance to buy anything.”

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“If homeowners can’t earn equity through the program it is not really homeownership”

Competing Goals: 

Competing Goals Affordability Asset Building Some programs maintain affordability over time by limiting the wealth creation for individual homeowners. Other programs offer unlimited wealth creation but don’t keep units affordable for future buyers.

Which matters more?: 

Which matters more? Preserving Affordability Or Building Assets?

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Preserving Affordability Or Building Assets? Subsidy levels are too high for only one family to benefit. Investment in housing today should create units that stay affordable for future buyers… …without additional subsidy.

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Preserving Affordability Or Building Assets? Wealth matters! Rental Housing = “Getting by” Homeownership = “Getting ahead!”

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Preserving Affordability Or Building Assets? Average Family Net Worth White $81,000 Black $ 8,000

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Preserving Affordability Or Building Assets? Do we really have to choose?

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Monterey County Population by household income level

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Zillow.com Approximate price for a 1,500 Sq Ft home at each location

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Monterey County Roughly how much can each income group afford to pay for a home?

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Where are the Blue houses?

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Where are the Yellow houses?

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What if there were $300,000 houses? Something for these people to buy?

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What if there were $300,000 houses?

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What do we do when there are no $300,000 houses? Local programs make green houses affordable to blue buyers. Inclusionary or Subsidized Homes

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When a family buys a $500,000 home for only $300,000, how much should they earn when they sell?

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When a family buys a $500,000 home for only $300,000, how much should they earn when they sell?

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Shared appreciation offers comparable wealth creation

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Resale restrictions tied to incomes limit appreciation but protect affordability

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Even restricted prices can generate life altering wealth

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We don’t need to ask: Should homeowners earn equity? We do need to ask: How much more is ownership worth? How much wealth should buyers earn? How much can we afford to spend to preserve affordability of existing homes?

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Rick Jacobus Burlington Associates 510-653-2995 Rick@rjacobus.com www.rjacobus.com

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