I read your first of four affordable housing articles. I enjoyed it. I know this letter is premature because the other articles have yet to be published but here goes.
Affordable housing is really nothing more than another transfer of wealth. What I mean by that is someone has to pay the difference. It’s a question of what group of taxpayers.
Another option to the housing problem is quality apartments. My father lived in an apartment complex in Detroit for over 25 years. It was a nice complex with a pool, a tennis court, social gathering rooms, professionally managed. It was his home along with the other tenants, most of whom were long term. In Whatcom County we do not have the quality apartment buildings I am talking about — large units, properly soundproofed, good storage facilities and other amenities.
These apartments are not cheap to rent, and are about $1000 to $1500 for one to three bedrooms. However they solve the problem of affordable housing. If a person/family cannot afford these rents they certainly have no business paying a mortgage. Also, on a monthly cash flow basis, rent is much cheaper than home ownership. Do the math for a $200,000 house; 20 percent down plus all ownership expenses and opportunity costs versus $1500/monthly rent.
Long term gains of housing ownership requires a 12 percent appreciation to capture buying (3 percent) and selling (9 percent) expenses. There is a tax advantage to home ownership, but the standard deduction has been raised to the point where the interest deduction for a lower-priced house no longer offers the huge tax advantage it once did.
Our tax structure is wrong. Property taxes account for school levies. This eliminates many voting residents and needs to be changed. Contrary to belief, a raise in property taxes does not mean a raise in rents. There are many other market forces in place that dictate rents.
I have very briefly raised a few issues, there are others. I look forward to your other articles.