There are a litany of calculators out there for people to use when they are ready to calculate how much home they can afford. Put in the magic number and you get exactly what level of house you can afford, at precisely the perfect time. What if that magic number was the only number you needed to get a house or an apartment? That whatever number you put in was enough. Introducing the sliding scale housing market.
This is Meat and it’s the Tuesday series on The Black Urbanist. It’s when I take a current news event that’s moderately related to what I talk about here and add a bit of my own commentary. It’s also the holiday season and I’m sure you are either hosting all your family or you are getting ready to be one of those poor souls invading the airports and train stations and roads that the news always talks about on holidays. Take some stress out of your trip by using Expedia to book a good deal on your flight, rental car, hotel or all three. Click here for more information and know that your purchase will support The Black Urbanist and help me keep writing these meaty posts!
Could this really work? I understand that we are in a marketplace and a market that privileges the highest bidder when it comes to homes. However, there’s also a glut of foreclosed homes. Several cities are offering homes for a $1. What if we developed a system that married the parts the system that were beneficial to homebuyers, sellers and cities.
The first pillar of this plan would be establishing a standard rate for realtors, one that makes sure they get a fair rate. Essentially, there would be low-cost realtors, much like there are low-cost versions of other service providers. This forum on Zillow brings up the need for such a provision. This low-cost realtor role could be taken over by existing housing nonprofits and housing authorities, which already serve in this role for many people. What would happen is that this strategy would be given the advertising dollars and prestige currently afforded to the regular mortgage process.
The main difference would come with the mortgage market. This method would essentially be getting rid of mortgages. It would have to be grandfathered in, but the idea would be that buyers pay 30% of their current income and that’s it. The down payment is the final payment. And yes, since we are going on income, some houses would be free.
Would this be sustainable? It depends. A lot of the current housing market is speculation. A new amenity comes to a neighborhood and real estate speculators jump in and raise the prices of their homes, condos and their rents. This in turn creates the high prices one comes to expect in a gentrifying or already gentrified area.
I could foresee going to a sliding scale to deal with the factors presented in this article, which noted that middle-income earners can afford homes in many areas in the country, especially those with higher than average salaries.Yet, they gave grades to particular cities and no city received an A, which assumes perfect affordability (lower taxes, homeowners insurance rates and prices out of the gate). What does it really benefit to have such inflated home prices? Our number one priority should be making sure people get into homes, not that some faceless developer gets more money.
However, some developers and landlords are actually good. Some people need to rent, because they are mobile. Yet, I think a good start would be to reign in the mortgage market using a method such as this.