gentrification and affordable housing.

[mopinko]

i am working my precinct to get my 4 time incumbent alderman elected. it is frustrating, because he is a great guy, and the ward has improved so much in the time that he has been in office. but in 16 years, grudges build up.
like most good urban areas, much of our rental housing is rapidly going condo. renters are being squeezed out. low income people are being squeezed out. but what can you do?
i just got my ears bent back by a guy who has been working on this issue. but he didn't have any magic wand to wave, either. he seems to think that in chicago, an alderman can do anything. but he couldn't point to a ward where the alderman solved the problem. (he also objected to the presence of seiu members coming in to work on the campaign. sees no link between good union jobs and people not needing help with their housing in the first place.)

so, i ask the great du data bank- what can you do to preserve affordable housing? mostly "affordable" around here meant- poor quality. that's not a solution, either.
so what can be done?

[Solo_in_MD]

1. I am not sure you can...

The current industrial model with large urban centers is breaking down. Its not called the rust belt for no reason. As the economic base of an area changes, look for other changes, including the cost of housing and changes in residents. In the long haul its unstopable.

There have been studies out there pointing out that Gen X and Gen Y think more poorly of unions than their baby boomer parents. Saw at least one here recently. BMy *guess* is that by not publicaly indentifying union membership it keeps the issue cleaner and more focused.

[Sen. Walter Sobchak]

2. Make the area unlivable to hipsters?

This is a difficult issue, rent control only encourages the condo conversions, a low cost housing ratio in new developments is badly abused. (requiring a certain number of low cost units in any given development, that usually end up in the hands of developers kids or relatives)

The best alternative is making the market hostile to speculators (tax the shit out of unoccupied housing) but that can never go far enough.

[mopinko]

3. it used to be.

when i moved in it was regularly referred to with the adjective- gang infested. this alderman got rid of a lot of riffraff. he did force the sale of quite a few "bad buildings" but they are all condos now.

the way i see it we have a choice between condos and crack houses.

[Kingshakabobo]

8. Chicago is moving toward placing their affordable housing in...

...trusts so they stay affordable after the original owner moves on. The idea is to set a pre-determined maximum profit margin for the original owner by keeping the property in the affordable inventory.

Basically, the city becomes your partner when you purchase an affordable home. The deal is structured as a land trust with a 99 year renewable land lease. I attended a lender's roll-out meeting with the city and Fannie Mae. They are still working out the details to make a mortgage document that is saleable to Fannie on the secondary market.

[mopinko]

9. there is a building in my precinct

about 35 units or so, that was part of plan from the harold washington administration. they got very good terms to buy and rehab the property for affordable rental property. they did a fine job, unfortunately, they were only required to keep it that way for 10 years. 10 years up- zip, all condo.
if you have a link to more info, i would be interested. like i said, i think there are no good solutions. i think that the city could do more to help people with the downstroke for some of these condos. compared to singly family houses, they are affordable housing. if you can get started.
the idea you speak of sounds like it might work. lord knows ritchie understands the problem. i can see some institutional investors who might take this on. but i cannot see folks who are small time, as many condo developers are, agreeing to limit their profits.
i am more than a little tired of the demonization of the people doing this. i guess people do not see housing stock as an important community resource that must be MAINTAINED! when it starts to fall apart, you better hope someone is willing to stick their ass out, and do the big gut rehabs. we face a choice between crack houses and condos. we really do.
funny fact about my aforementioned crying voter- i'm told that when the block was downzoned, he not only did not support the downzone, he demanded that his property be removed from the list.

[Kingshakabobo]

11. The City is running a program called "City Mortgage"

It's a below market rate @ about 5.98% for up to 100% financing AND a 4% gift at closing for closing costs and down payment. Also, it has a reduced mortgage insurance rate......The rate is about .5% below market rate when you consider what 100% financing will cost you. Also, there are no rate increases for "expanded approvals" or people with lower credit scores/bruised credit - relaxed underwriting guidelines. Borrowers have to attend counseling before closing......which is a good thing.


I'll have to look for website info for the "CCLT." One of my coworkers has the packet. We are waiting for one our larger investors(like Chase or Citimortgage) to get on board before we can do anything with it as we are a smaller lender who sells the loans to the master servicer after closing. It sounds like it will solve that problem of "10 years and back at market value" problem......or the developer's kid/cronies going in as a low income borrower and reaping a large windfall after a few years. Their goal is to maintain the affordable stock for the next buyer.

[mopinko]

12. counseling at the least

this kind of approach has come back to bite buyers and the community at large in the ass.
bad actors selling homes they know they can go back and pickup at foreclosure down the line. and folks not ready for the responsibilities of home ownership.
that is the trouble with real estate. it is not just one person's investment.

[Kingshakabobo]

16. Well, you will see more of that.

House Bill 4050 is back in play. Anyone doing an interest only, stated or low credit score loan in Cook County will have to go to counseling. The lenders are in an uproar about it. I'm torn over it. I GET what they are trying to do but it will probably end up causing more harm than good - in the long run.

They tried it last year in certain south side zip-codes but all it did was cause a bunch of lenders to refuse lending in those zip codes. Also, the counseling, which used to be free, now costs $300 dollars. They won't allow us pass the charge on to the borrower but, as we know, EVERYTHING gets passed on - either in rate or other fees. Also, the title companies were squawking that they would charge an additional $500-$1000 for the increased table time, work and risk involved as they are ultimately responsible for compliance.

[mopinko]

19. just no good answers.

except good jobs. stronger unions. a real middle class again. much as i love my city, and much as i think things are on the right track, privatizing city services has greased the skids on wages. and vetoing the big box ordinance was suicide, if you ask me.

[alarimer]

4. We are dealing with this issue too

There was a public meeting about some subsidized apartments they want to put in here. We are talking typical middle-class suburban area. But at the meeting a number of people stood up and were concerned about "property values". Now I ask everyone, where are poor people supposed to live? There is not enough affordable rental housing here. Not in decent neighborhoods. New apartments routinely go for at least $600 a month for a one-bedroom (which doesn't sound like a lot but keep in mind wages are also low here). I have had a hard time finding affordable housing for ME and I make over 30K a year. Imagine making 7/hour and needing a place to live that isn't in the barrio.

Forgot to add: one of the people complaining about lowering property values was a woman whose husband was in the Coast Guard and they expected to move within the year!

[mopinko]

5. i guess the thing that pissed me off was

his attitude about unions, as though wages were not a part of the equation.
this is a macro economic problem. one alderman did not create it, and one alderman cannot fix it. but he tries damn hard, anyway. and has done a lot of good. a lot. 2 new schools, a beautiful library. a new transit station is in progress.
i gotta figure out how to accept these angry people.

[mopinko]

6. no takers, eh?

yup, i think this is a problem without a solution.

[Nikia]

7. Hold a meeting with the landlords

And property owners. I don't know if the landlords in the area are local or live a distance a way or whether they are individuals or corporations. Those factors alone might make a difference.

[mopinko]

10. no offense intended, but

:rofl: :rofl: :rofl: :rofl:

landlords are all of the above. this alderman has busted his rear to drag a lot of the slumlords to court, and in quite a few cases forced the sale of the properties. but unless someone is going to make money on the back end, how are they going to come in on the front end to gut these pits?
but even the good ones have to make SOMETHING. taxes keep going up, utilities keep going up, maintenance is expensive. affordable is someone who skips one of the above. then this affects everyone.

[kineneb]

13. maybe time to re-think "housing"

stop looking at failed American model and look around the world for what actually does work. Perhaps co-op housing, or some other model. But current one isn't working here anymore.

Turning rentals into condos only benefits those who can buy.

[Sammy Pepys]

14. Washington, D.C.

We just bought about 8 months ago.

In D.C. so many people want to live in the city that they're willing to spend more for the location. What ends up happening is that folks start looking at these blighted neighborhoods that are actually in very good locations and buying up the properties, and before you know it...bam! The neighborhood no one would've dared walk through at night ten years ago is the latest hot block to live on.

It's a double-edged sword. The neighborhoods gain some degree of safety and livability, but lots of folks end up forced out because of it.

[mopinko]

17. that's me.

i have been here 20 years. my 2 flat is worth about 6 times what i paid, not even factoring in many improvements.
there is a new building on the next block- 4 townhomes, and a $1M penthouse.

[EFerrari]

15. I would ask, what is the cost of homelessness to the community? n/t

[mopinko]

18. the cost- a whole lot.

i feel for people. i talked to a longtime neighborhood resident who has been bumped out by condos 6 times.
we do have a lot of good social service agencies here. and the poor do have a voice. one of our campaign pieces features the woman who has organized section 8 tenants in the ward. lots of slum lords have been forced out. still, we have managed to retain a lot of section 8.
but i do not know where some of the folks that get the boot end up. we have a 2 flat a few doors down that has attracted some really bad tenants. it was even a whore house for a few years. there is always at least some outreach to these folks. they do not just get dumped. but i know some are dumped in the end.
but it is sad that most "affordable" housing is just crap.

[EFerrari]

22. Sometimes people aren't exactly "dumped" but they can't navigate.

And I agree. It's stupid to build substandard housing -- or, not stupid if you are a contractor with an "in" to get contracts to renovate.

[mopinko]

23. just to clarify

the housing was quality when it was built. but that was 1850-1900. my house is 103.

[EFerrari]

24. I see. Well, affordable housing is an issue that we need to deal with

post Civil War and yesterday.

:(

[SoCalDem]

20. Unfortunately, there's not a lot that can be done.

As people "bounce" around trying to afford homes, there's a cycle that perpetuates itself.

The close-in places cost too much , so the younger buyers move to suburban "new" areas, which usually start out "cheap" to get them going.

Once they start to fill up, all kinds of amenities flow to them, and the houses start to rise in cost with each new amenity. For the early birds to "move up" they now much MOVE again to a newer development..and so it goes, UNTIL they get so far from their jobs that they decide to chuck it all and move back to the 'city'..

The only way they can find large places for their familes is to find an area that's not too run down, and to gentrify it. The first ones back in, get the bargains, but as they start to spiff up a neighborhood, their peers start to move back too.

These "old neighborhoods" are often full of older people who are ready to sell out and perhaps move in with grown children, or who finally see a way to sell for enough to move to a cheaper environ..

As more and mosr families move back, the developers see a goldmine of possibilities, and start "renovating".. As these prices skyrocket, the cycle starts all over again..

[maxsolomon]

21. real estate replaced the tech bubble

and we are coming to the end of this ride, very quickly.

affordable housing cannot be built in significant amounts - the entire economic model of america prevents it. preserving it is socialism.

therefore, if you are not rich or already on the roller coaster (and not with an ARM), you're fucked.