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By Kim Murphy
Murphy & Murphy Southern California Realty 

Real Estate Round-Up

Affordable owner-occupied workforce housing


Last updated 2/15/2019 at 10:24am

Two weeks ago, I was in Indian Wells for the California Association of Realtors state directors meeting. As I reported in last week's column, there are topics that are either coming forward in the form of discussion or in the form of pending legislation. This week I want to dig deeper into “affordable workforce housing” which is central to housing availability, as well as transportation gridlock, across the state.

What exactly is “affordable workforce housing”? What is “affordable owner-occupied workforce housing”? Both terms came out of the conversation surrounding the housing crisis. The availability of housing, or in the case of California, the unavailability of housing, is the root cause of the affordability problem.

Much of the conversation over affordable housing is focused on developing much needed housing for those who would like to live in the communities in which they work. In fact, “affordable owner-occupied workforce housing” and “affordable workforce housing” are often referenced in policy discussions with this goal in mind. In simple terms, homes need to exist in the same community as the jobs and at a price, whether it is for sale or for rent, that the holders of those jobs can live in.

Let me provide you with a little history. The concept of workforce housing has its roots in the ski towns of Telluride and Aspen, Colorado. In 1974, in response to locals not being able to purchase homes due to the disparity between their wages and cost of homes and land rising sharply due to the influx of buyers from New York and Hollywood, a conference was organized at the Aspen Institute.

At that time, the problem seemed to be a ski resort anomaly. It was made worse due to the limited land available for development and the vast quantity of federally owned land, which made “sprawling” unrealistic. This problem has now become California’s problem. The cost of land, plus the cost of development, puts most private sector development financially out of reach for most of California’s working families.

Since the mid 2000’s, California has continued to search for tools to help private developers successfully solve the housing shortage, without assistance from the government. No solutions have been developed. Without the ability to fund initiatives or to create incentives or mandates, the housing availability and the resulting lack of affordability has not improved. In fact, it has gotten worse.

In order to address the issue, the term must first be defined. A uniform definition could help the state establish new programs in order to bridge the state’s housing supply and affordability gaps. In 2017, SB 2 (Atkins) was passed. It put a fee of $75 per document, up to a maximum of $225 for multiple documents, on the recording fees collected on real estate transactions, excluding purchase escrows. Twenty percent of the funds received from SB 2 (Atkins) are allocated specifically for affordable owner-occupied workforce housing.

In 2016, the California Housing Finance Agency established income limits to 140 percent of AMI (area median income) for conventional loans in 35 high cost counties in California. In 2017, CalHFA determined that this limit remained too low to qualify a substantial number of persons to buy housing, which resulted in an increased limit of 150 percent AMI in all 58 counties and created a single household size, establishing a single income limit per county.

The AMI (the mid-point of the area’s income) in San Diego County for 2018 was $63,400. Increasing the income limit to 150 percent of this number, or up to $95,100, still presents a big challenge to rent or purchase property in the county.

The California Association of Realtors (CAR) is sponsoring legislation to statutorily define “affordable owner-occupied workforce housing” and “affordable workforce housing” so the state can begin the process of creating programs that will stimulate building for the 70 percent of our population impacted by the current shortage of housing. Once that is established, we can begin the discussion of what kind of housing will be built, some for ownership and others for rental.

Being able to provide affordable housing for the workforce in the area, will decrease traffic congestion and stabilize communities. When people live where they work, they invest their time and money in the community. Next week I’ll write about “rent stabilization”.

Kim Murphy can be reached at [email protected] or (760) 415-9292 or at 130 N Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.


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