Where are the jobs?
In the past, I’ve taken the position that we need to know the “real” demand for affordable housing, before we approve projects such as the Boomerang, Burlingame 2, or Aspen Walk.
This time around, I’m taking a different tack: I’m going to run the numbers needed (math doesn’t lie) to pay for a mortgage, insurance, utilities and HOA fees including capital reserves, all factors in respect to salaries required to qualify for a mortgage.
For this exercise let’s assume a $225,000 purchase price for a new one-bedroom unit. Putting 10 percent down leaves a mortgage of approximately $200,000, generating a monthly mortgage payment of about $1200. Add in property taxes at $50 per month, insurance at $50 per month, utilities at $75 a month, and HOA fees at $300 per month.
Add them all together, you get $1,675, which is the figure a bank would use to determine your qualifications for a loan.
The new rules want a homeowner to stay under 31 percent of their monthly income when figuring what is affordable.
Working backwards, an individual would need to earn about $5583 per month or $66,996 per year under this scenario.
My question is: How many local jobs available pay $67,000?
I suspect NOT ENOUGH to justify a rash of new Category 3 and 4 units.
Raise the mortgage to $250,000 or $300,000, and the number get worse. But, to be fair, what about two income households?
Let’s say the mortgage goes up $300 per $50,000, and the other monthly expenses rise 25 percent. That would generate a $1,500 mortgage plus about $600 in taxes, insurance, utilities, and HOA fees, making a grand total of $2,100 monthly. That would mean to qualify for a mortgage the combined monthly income would need to be $7,000 per month or $84,000 a year.
I’ll admit more doable. But, even if you divide the salaries equally, how many $42,000 jobs are there, or will there be in the future, to cover 200 new affordable units, mostly Category 3 and 4?
I would suggest not enough.
So, instead of trying to figure out who wants a house, maybe we should examine the future of our job market?
I suggest if we’re building affordable housing for our local work force, we should try to determine what that local workforce would look like, and more importantly earn, in the next 5 to 10 years.
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