Aich, thanks for the condescending tone, but I am completely with you. I recognize that houses have to be paid for when built. You stated earlier that $250,000 was enough to pay everyone except the developer to build a house. As I showed above, the target market for these affordable homes can pay 275-325k for the home. Now you are using my number of 324 as the cost to build it, not the selling price.
You don't need a major metro area to have economies of scale- the numbers that you accepted earlier imply that someone could make 50,000 per home if they built them at 250 and sold them at 300. Not a great profit for an individual spec builder, but if someone thought they could sell 10 of them, they could obtain this thing called a construction loan for 2.5 million, build them, and if they are right about the demand, they could make 500,000.
When demand starts returning, there will be people willing to take that risk, even if you are not.
You with me? Another thing that can be done, once this thing gets under way is to borrow against the future transfer tax revenues. This is called a bond, you may have heard of it.
Aich, your analysis is so far off that you have cast me in the role of affordable housing advocate and steamboat 700 supporter - I am the opposite of the former and neutral on the latter in real life.
Anyway- you are now basing your analysis on it costing $324k to provide one affordable house to one individual. So your analysis assumes that the city builds houses for 324k and then gives them to people for free. I can assure you, this is not how this works- in fact the way things are going now, the city would probably use that $4m that you came up with to provide silent second mortgages/down payment assistance to people to help them get into houses.
Secondly, if affordability is a goal, the real impact of steamboat 700 will be to increase the supply, thus stabilizing price to some degree.
And you keep saying that someone cannot build these to make a profit- a small spec builder probably couldn't on one house, but if the demand is there, someone could certainly use economies of scale to make it worthwhile to build a bunch of them. If demand isn't there, then nothing will ever get built, so who cares if it's annexed or not?
Cindy, the price at 7% would be about 277,000. I have no idea what the credit rating requirement would be, but I am sure you are right, if you had all sorts of other debt, your ability to get a loan may be limited because lenders probably view excessive debt as a signal that you cannot handle your finances well. Until a few years ago, people who could not save 20% and display responsible use of credit were called renters, and those that could were called buyers. We all know what happened when banks loosened those standards.
Sure there are always other expenses in life, mavis, I think that is why federal and local governments use 30% as their guideline- that allows for roughly 50% of your gross pay (the other 20% going to taxes) to cover those other expenses. This is an affordability standard used by HUD, FNMA, and a great number of other local and national institutions that promote affordability, and that is a debate much larger than Steamboat 700.
The problem with affordable housing programs as I see it is that they target the median or 80% of the median, which means that by definition the programs are designed to help people who make more money than half (0r 40%) of everybody else in their community. If affordable housing program's goals were to truly help people in need, they would target people in the 10th percentile of income and work their way up, not the 50th percentile. The affordable housing requirements set forth thus far in Steamboat have been designed to help people who make over 60,000 per year, which isn't a group that needs that much help, this explains the lack of interest in the 'affordable' offerings that resulted. As nice as it would be, I don't think that programs will ever make homeowners out of those lower percentiles of earners, so once again the discussion comes back to creating a large enough supply of rental properties to drive rental prices down. I do not know if Steamboat 700 will achieve that or not, I voted for people that I trust to read the information and decide - I honestly don't have the time or interest to read all of the paperwork related to the 700 plan.
The dream of single family homes in steamboat for under 200k will never come to fruition because of construction costs- Aich's figure of 150 per foot sounds about right, so a 1,500 square foot home would cost 225,000 to build on free land with no tap fees, and no realtor commissions or builder profits.
Housepoor, the AH guidelines are based on gross pay, not net. That is consistent both nationally and locally. I didn't mention where the other 70% of gross pay goes, because it is irrelevant to this discussion.
History lesson: Did you know the 30% rule, which is frequently 32% these days, crept up from an original 25%, which dates back to the days of company towns, when employers would provide housing to employees, and only pay them 3 weeks out of 4, with the fourth week paying their rent. The 25% has gradually crept to 30-32% over the years. What is even more interesting, is that the 25% and company towns' roots pre-date federal income tax, so while it appears that our housing cost has risen by 5-7 percentage points of our income, it has really risen 10-15 percentage points of our take-home pay.
Of course, before you get up in arms about that being unfair, our housing is quite a bit nicer than what the employers were providing way back when- I am happy to pay the extra amount to live in a house which I chose and can modify however I see fit, rather than in a dormitory style accomodation provided by my employer which I wouldn't own - while the portion of income we all spend on housing has increased, so has the standard of housing that people expect, so it does make sense that a home with running water, electricity, a refrigerator and no varmints should cost more than a cot in a room shared with a few co-workers.
Aich, your analysis has one major error that I can see:
You state that 80% AMI is 65,000. I will take your word for it.
65,000/12=5,417 per month 5,417*.3=1,625 to spend on housing per AH guidelines (30%) 1,625-150=1,475 for mortgage after 150 of HOA and Property tax A 30 year mortgage at 5.5% and 1,475 per month is $259,780.60. $259,780.60/80%=$324,724.50 purchase price (with 20% down).
I'm not trying to convince you to support this development, but I'd assume you will, since I have shown you how you got it wrong and you said you would support it if someone did that, right?
Actually fartpark, motorcycles headlights are not on because motorcyclists are smarter than bicyclists, it is because motorcycle manufacturers wire the headlight to the ignition- if your bike has a headlight, the headlight is on when the bike is running unless it's broken or disabled intentionally.
One other point, exduffer seems to be concluding that the City gets no money from a property that is built and then sits vacant for most of the year. The Use Tax in the building permit process ensures that this is not the case; in fact, in the extreme situations that exduffer put out there, the City collects a few million dollars up front in exchange for plowing some vacant roads. Not to mention that sales-tax wise, I'd guess the family that owns a vacation home here and spends two weeks a year in it probably spends at least as much on antler chandeliers and one-piece ski suits while they are in town as I spend on groceries and bike parts the rest of the year, so it's not like we're not getting tax money from vacation homes.
I'd have to agree with Scott that the real problem is a complete inability to separate required government spending (like cops and snowplowing) from niceties (like free buses, golf courses, tennis bubbles, museums, bedbug infested hotels, etc...) is the real problem. Until the local government can show some responsibility with the money they do have, I see no reason to increase the taxes.
Committee collecting signatures to put Steamboat 700 to vote
Aich, thanks for the condescending tone, but I am completely with you. I recognize that houses have to be paid for when built. You stated earlier that $250,000 was enough to pay everyone except the developer to build a house. As I showed above, the target market for these affordable homes can pay 275-325k for the home. Now you are using my number of 324 as the cost to build it, not the selling price.
You don't need a major metro area to have economies of scale- the numbers that you accepted earlier imply that someone could make 50,000 per home if they built them at 250 and sold them at 300. Not a great profit for an individual spec builder, but if someone thought they could sell 10 of them, they could obtain this thing called a construction loan for 2.5 million, build them, and if they are right about the demand, they could make 500,000.
When demand starts returning, there will be people willing to take that risk, even if you are not.
You with me? Another thing that can be done, once this thing gets under way is to borrow against the future transfer tax revenues. This is called a bond, you may have heard of it.
November 5, 2009 at 1:46 p.m. ( permalink | suggest removal )
Committee collecting signatures to put Steamboat 700 to vote
Aich, your analysis is so far off that you have cast me in the role of affordable housing advocate and steamboat 700 supporter - I am the opposite of the former and neutral on the latter in real life.
Anyway- you are now basing your analysis on it costing $324k to provide one affordable house to one individual. So your analysis assumes that the city builds houses for 324k and then gives them to people for free. I can assure you, this is not how this works- in fact the way things are going now, the city would probably use that $4m that you came up with to provide silent second mortgages/down payment assistance to people to help them get into houses.
Secondly, if affordability is a goal, the real impact of steamboat 700 will be to increase the supply, thus stabilizing price to some degree.
And you keep saying that someone cannot build these to make a profit- a small spec builder probably couldn't on one house, but if the demand is there, someone could certainly use economies of scale to make it worthwhile to build a bunch of them. If demand isn't there, then nothing will ever get built, so who cares if it's annexed or not?
November 5, 2009 at 10:37 a.m. ( permalink | suggest removal )
Hermacinski, Reisman, Engelken win City Council seats
I am pretty sure that 64% to 36% would be considered a landslide in most elections, not 'pretty close.'
November 3, 2009 at 9:35 p.m. ( permalink | suggest removal )
Committee collecting signatures to put Steamboat 700 to vote
Cindy, the price at 7% would be about 277,000. I have no idea what the credit rating requirement would be, but I am sure you are right, if you had all sorts of other debt, your ability to get a loan may be limited because lenders probably view excessive debt as a signal that you cannot handle your finances well. Until a few years ago, people who could not save 20% and display responsible use of credit were called renters, and those that could were called buyers. We all know what happened when banks loosened those standards.
Sure there are always other expenses in life, mavis, I think that is why federal and local governments use 30% as their guideline- that allows for roughly 50% of your gross pay (the other 20% going to taxes) to cover those other expenses. This is an affordability standard used by HUD, FNMA, and a great number of other local and national institutions that promote affordability, and that is a debate much larger than Steamboat 700.
The problem with affordable housing programs as I see it is that they target the median or 80% of the median, which means that by definition the programs are designed to help people who make more money than half (0r 40%) of everybody else in their community. If affordable housing program's goals were to truly help people in need, they would target people in the 10th percentile of income and work their way up, not the 50th percentile. The affordable housing requirements set forth thus far in Steamboat have been designed to help people who make over 60,000 per year, which isn't a group that needs that much help, this explains the lack of interest in the 'affordable' offerings that resulted. As nice as it would be, I don't think that programs will ever make homeowners out of those lower percentiles of earners, so once again the discussion comes back to creating a large enough supply of rental properties to drive rental prices down. I do not know if Steamboat 700 will achieve that or not, I voted for people that I trust to read the information and decide - I honestly don't have the time or interest to read all of the paperwork related to the 700 plan.
The dream of single family homes in steamboat for under 200k will never come to fruition because of construction costs- Aich's figure of 150 per foot sounds about right, so a 1,500 square foot home would cost 225,000 to build on free land with no tap fees, and no realtor commissions or builder profits.
November 3, 2009 at 9:33 p.m. ( permalink | suggest removal )
Committee collecting signatures to put Steamboat 700 to vote
Housepoor, the AH guidelines are based on gross pay, not net. That is consistent both nationally and locally. I didn't mention where the other 70% of gross pay goes, because it is irrelevant to this discussion.
History lesson: Did you know the 30% rule, which is frequently 32% these days, crept up from an original 25%, which dates back to the days of company towns, when employers would provide housing to employees, and only pay them 3 weeks out of 4, with the fourth week paying their rent. The 25% has gradually crept to 30-32% over the years. What is even more interesting, is that the 25% and company towns' roots pre-date federal income tax, so while it appears that our housing cost has risen by 5-7 percentage points of our income, it has really risen 10-15 percentage points of our take-home pay.
Of course, before you get up in arms about that being unfair, our housing is quite a bit nicer than what the employers were providing way back when- I am happy to pay the extra amount to live in a house which I chose and can modify however I see fit, rather than in a dormitory style accomodation provided by my employer which I wouldn't own - while the portion of income we all spend on housing has increased, so has the standard of housing that people expect, so it does make sense that a home with running water, electricity, a refrigerator and no varmints should cost more than a cot in a room shared with a few co-workers.
November 3, 2009 at 4:55 p.m. ( permalink | suggest removal )
Committee collecting signatures to put Steamboat 700 to vote
Aich, your analysis has one major error that I can see:
You state that 80% AMI is 65,000. I will take your word for it.
65,000/12=5,417 per month
5,417*.3=1,625 to spend on housing per AH guidelines (30%)
1,625-150=1,475 for mortgage after 150 of HOA and Property tax
A 30 year mortgage at 5.5% and 1,475 per month is $259,780.60.
$259,780.60/80%=$324,724.50 purchase price (with 20% down).
I'm not trying to convince you to support this development, but I'd assume you will, since I have shown you how you got it wrong and you said you would support it if someone did that, right?
November 3, 2009 at 4:06 p.m. ( permalink | suggest removal )
Youth vote largely absent in Routt County
How dare they post public records on a news website! Next thing you know they'll be posting property information on the assessor's website!
November 2, 2009 at 11:06 a.m. ( permalink | suggest removal )
Riverside residents fight city to keep mowed field in neighborhood
Yes Karen, it does.
August 28, 2009 at 8:03 a.m. ( permalink | suggest removal )
Cyclist collides with car, has minor injuries
Actually fartpark, motorcycles headlights are not on because motorcyclists are smarter than bicyclists, it is because motorcycle manufacturers wire the headlight to the ignition- if your bike has a headlight, the headlight is on when the bike is running unless it's broken or disabled intentionally.
August 25, 2009 at 4:21 p.m. ( permalink | suggest removal )
Paul Hughes: Tax structure wrong
One other point, exduffer seems to be concluding that the City gets no money from a property that is built and then sits vacant for most of the year. The Use Tax in the building permit process ensures that this is not the case; in fact, in the extreme situations that exduffer put out there, the City collects a few million dollars up front in exchange for plowing some vacant roads. Not to mention that sales-tax wise, I'd guess the family that owns a vacation home here and spends two weeks a year in it probably spends at least as much on antler chandeliers and one-piece ski suits while they are in town as I spend on groceries and bike parts the rest of the year, so it's not like we're not getting tax money from vacation homes.
I'd have to agree with Scott that the real problem is a complete inability to separate required government spending (like cops and snowplowing) from niceties (like free buses, golf courses, tennis bubbles, museums, bedbug infested hotels, etc...) is the real problem. Until the local government can show some responsibility with the money they do have, I see no reason to increase the taxes.
August 20, 2009 at 12:21 p.m. ( permalink | suggest removal )