By Jodi Summers
People who live in Santa Monica are blessed. By some means and motivation, they’re willing and able to pay $500,000 or more to live here. And with our vast array of social services and low-income housing programs, our city has become a microcosm for life in the United States.
Of all 95 million Americans, a full one-third of the population has one or more housing problems, according to “America’s Neighbors: The Affordable Housing Crisis and the People it Affects.” Of the people with housing issues, 43.6 million have incomes below $25,000. The study cites the most common housing problem as the cost burden, with 55.5 million low-income people paying more than 30 percent of their income towards housing. In addition to the expense, housing problems can include substandard conditions, overcrowding or homelessness, according to a report released from the National Low Income Housing Coalition.
The inability to purchase a home has become somewhat of a socioeconomic dividing line. In today’s easy-mortgage society, home ownership has again become the American dream. It’s been proven easier for homeowners to build economic wealth, which can later be used to buy college educations, as well as to fund retirement living and provide for other privileges that otherwise would be beyond reach.
“Home ownership is perhaps the best illustration of how access to credit can create new wealth-building opportunities,” confirms Federal Reserve Board Governor Mark W. Olson.
The recent round of low mortgage rates has allowed a growing number of Southern California renters to become homeowners. The percentage of homeowner households increased by 1.5 percent from 1998 to 2001, and gains in home ownership in the two lowest income groups increased by 1.8 and 2 percent in the same period, according to data collected from the Fed’s most recent Survey of Consumer Finance.
The home ownership rate in the Los Angeles area is about 40 percent, lagging well behind the national rate of about 70 percent. California households have a median household income of $52,320, making them $41,360 short of the $93,680 qualifying income needed to purchase a median-priced Golden State home at $406,390. If you’re lucky, that $406,390 might get you a two-bedroom condo in Santa Monica. If you’re part of the 43.6 million who have incomes below $25,000, go talk to local housing officials.
Ever the socialist republic, Santa Monica is attempting to remedy home affordability issues by proposing to offer two-and three-bedroom condos for less than half of their current market value.
“We are not shifting our major focus, commitment away from very low-income rental housing,” notes Joan Ling, executive director of the Community Corp. of Santa Monica. “It’s just that we want to try something different, because we know the teachers and the classified workers in the district are priced out of being here.”
Currently, the Community Corp. of Santa Monica oversees more than 2,400 low-income units on 78 properties throughout Santa Monica.
Many details still need to be worked through to make this project viable. Ling estimated close to $100,000 in subsidies from the federal, state and local governments will be needed for each condo in order for CCSM to sell them below market rates.
To sweeten the possibility of home ownership for all who are motivated, the California Housing Finance Agency (www.calhfa.ca.gov) has announced three revisions to its first-time homeownership program. These revisions include: ■ An increase in income limits — elevating the amount a borrower can earn and still qualify for CalHFA’s low interest rate financing. ■ Newly revised sales price limits are the highest allowable by federal law. The new sales price schedule shows an increase for most of the state’s 58 counties. Price limits in some areas increased as much as 66 percent. ■ Mortgage interest rate reduction — CalHFA has reduced its already low mortgage interest rates by a point, making them one of the lowest cost mortgage programs in the state.
“Homeownership continues to be one of the most solid and durable investments a California family can make. And our recent revisions give even more strength and versatility to our homeownership programs,” declares California Housing Finance Agency Executive Director Theresa A. Parker.
If there is motivation to work through the system, there can be home ownership options available to many who considered it out of their reach. (For your real estate needs, e-mail Jodi Summers at jodis@boardwalkrealty.com, or call (310) 309-4219).
Originally published in the Santa Monica Daily Press print edition on May 5, 2004. Read the original PDF.