Low Income Buyer How to Finance House

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					     HOUSING NEEDS                          AFFORDABLE HOUSING
     Affordable housing is a broad term used to describe decent, safe housing that is affordable to
     individuals and families making 80% or less of the Area Median Income (AMI). For Contra Costa,
     this means a family of four making less than $50,640.


     1 Low and Moderate Income Housing Goals Not Being Met
     ABAG is responsible for        Contra Costa has met or exceeded its total housing production goals over the past
     determining the region’s       ten years, producing more than 40,000 housing units and exceeding its production
     housing needs. Local
     Housing Elements               goals by almost 7,000 new units. While the County has exceeded its total production
     incorporate housing            goals, housing for low and moderate income households has been a challenge.
     production goals based on      During this same time period Contra Costa met only 42% of its affordable housing
     the Regional Housing           goals and had a deficit of 10,556 affordable units. Since 1988 there has been a
     Needs Determination
     process conducted by           shortage of low and very low income housing produced resulting in a greater
     ABAG.                          percentage of low income households paying more than 30% of their monthly
                                    income for housing.


     2 Funding Constraints Limit the Production of Low Income Housing
     Low income housing is          There are three public housing authorities in Contra Costa: Pittsburg, Richmond,
     almost exclusively the         and the County, which serves both the unincorporated area and the urban county
     domain of public housing
     authorities and non-profit     cities. The County and Richmond Housing Authorities own, lease, and manage a
     developers.                    total of 1,712 public housing rental units for income qualified individuals and families.
                                    In addition, there are several non-profit developers that own or manage another
                                    1,078 low income rental units.
                                    Very few for sale housing units are being developed in a price range that is affordable
                                    for low and moderate income buyers. Incentives need to be provided for the private
                                    sector to enter this segment of the housing market. In October 2006, the County
                                    Board of Supervisors unanimously passed an inclusionary housing policy requiring
                                    a percentage of homes in new residential developments to be affordable.


     3 Assisted Housing
     Local Housing Authorities      Approximately 12,430 households are provided housing assistance through local
     administer Federal Section     Housing Authorities administering Section 8 Housing Programs. There is an
     8 Housing Choice Voucher
     Programs that provide rental   additional need to serve another 3,000-plus households. Federal funding has not
     assistance to low-income       been adequate to meet the total needs in Contra Costa.
     individuals and families.



     4 Homeless and Housing
     Contra Costa County has        According to various surveys it is estimated that there are approximately 4,829
     over one million residents     individuals who are homeless each night in Contra Costa County. This number
     and is struggling to provide
     for the needs of a growing     includes people living on the streets or in temporary accommodations, such as an
     homeless population.           emergency shelter or on a friend or relative’s couch.
                                    The County offers four emergency shelter programs, two for families and two for
                                    single men and women. Each of the family shelters offers seven rooms for a
                                    maximum occupancy of 35 individuals. There are currently 280 families (with an
                                    average of three children per family) on a waiting list for the two family shelters.
                                    The two adult shelters have a total capacity of 160 beds (100 beds for men, 50
                                    beds for women, and 10 beds for youth) and a waiting list of 1,277 men and 724
                                    women. The City of Richmond operates 25 separate beds (18 beds for men and
                                    7 beds for women) designated specifically for residents of Richmond in the County’s
                                    San Pablo facility.
                                    Several Non-profit organizations also offer shelter for the homeless population with
                                    a total capacity of 260 beds.

27
1 Contra Costa County Has Not Met its Housing Goals for Low and Moderate Income Households
                              1988 to 1998                                  Income                      Income                                                       1999 to 2005
                                                                             Level                     Category

1988-95 Projected Need                                      1,289           $20,000                    Very Low                                                             6,481 1999-06 RHND Allocations
                                                                              to                     Income
1988-98 Actual Units Built                                       259        $34,999              (30% to 50% AMI)                               669                                  2000-05 Actual Units Built

                                                              903           $35,000                      Low                                                  3,741
                                                                              to                     Income
                                                                  90        $49,999              (50% to 80% AMI)                               342

                                                            1,289           $50,000    Moderate                                                                                      8,551
                                                                              to         Income
                                                    2,228                   $74,999 (80% to 120% AMI)                                                  2,143

                                                   2,966                    $75,000              Above Moderate                                                                                  15,937
                                                                              or                      Income
                        11,316                                               more                (Above 120% AMI)                                                                                                 22,842
12,000 10,000                     8,000    6,000    4,000     2,000    0             AMI = Area Median Income                               0    2,000      4,000   6,000    8,000    14,000 16,000 18,000     20,000 22,000
                                                            Source: ABAG Regional Housing Needs Determination, County Housing Element



 2                      There are Fewer than 3,000 Units of Low Income Housing Available in Contra Costa County
                                          NUMBER OF LOW INCOME HOUSING UNITS PROVIDED IN CONTRA COSTA COUNTY
       Public Housing Authorities
                                                   Contra Costa County                                                                                                                                       1,168
                                                      City of Richmond                                                                            533
       Non-Profit Developers - For Sale
                                          Comm. Housing. Dev. Corp                         118
                                                  of N. Richmond
                                              Habitat for Humanity                    62
       Non-Profit Developers - Built &
       Managed
                                           Contra Costa Shelter, Inc.                   100
                                                     Eden Housing                                                         379
       Non-Profit Developers -Managed
       by 3rd Party
                                             Contra Costa Shelter                          120
                                                    Eden Housing                                             317
                                          Comm. Housing Dev. Corp                                162
                                                of N. Richmond
                                                                                 0         100         200   300                      400        500        600      700       800         900   1,000    1,100

                          Sources: Housing Authority of Contra Costa County, Richmond Housing Authority, Eden Housing, Inc., Community Housing Development Corporation of North Richmond,
                          Habitat for Humanity, Shelter Inc.



 3 25% of Struggling Households Don’t Get Help                                                                  4 Homeless Assistance is Inadequate to Meet Need
                                ASSISTED HOUSING PROVISION AND NEED                                                                                   HOMELESS ASSISTANCE FACILITIES
            10,000                                                                                                                  2,500
                                                                                                                                                         Beds Needed:
                      9,000                          Pittsburg                                                                                              2,117
                      8,000                                                                                                         2,000
                                                     Richmond
 Number of Vouchers




                      7,000
                                                                                                                   Number of Beds




                      6,000                                                                                                         1,500

                      5,000

                      4,000                                                                                                         1,000
                                                     County
                      3,000
                                                                                      Additional                                                      540
                      2,000                                                             Need                                         500
                                                                                                                                                                                     331
                      1,000                                                                                                                                                                              160
                         0                                                                                                             0
                                  Assisted Housing                # of Households                                                                     Emergency               Transitional          Permanent
                                    (Section B)                    on Waiting List                                                                     Shelters                Housing               Housing
Sources: Contra Costa County Housing Authority, Richmond Housing Authority, Pittsburg
Housing Authority
                                                                                                                Sources: Bay Area Homeless Alliance, Contra Costa Housing Element                                      28
     HOUSING NEEDS                           SPECIAL GROUPS
     The housing market adequately serves those earning more than 120% of the Area Median Income
     (AMI). This income bracket can generally afford to buy a market-rate home in a location that is
     convenient to their place of employment. The public sector and most non-profit agencies concentrate
     their efforts on households earning less than 80% of AMI. Middle-income households earning
     between 80% - 120% of AMI are left to fend for themselves.


     1 Supply of Entry Level Housing Not Keeping Up with Demand
     Entry-level housing typically   There is a lack of entry-level housing (for-sale and rental) for moderate income
     targets households in the       households earning between 80%-120% of the AMI. Less than 40% of the housing
     60% to 100% AMI range.
     Providing affordably priced     stock is available to households below the median income. Most first time buyers
     homes in this income range      do not have sufficient income or down payments to afford conventional mortgages.
     is an ambitious undertaking.    Only 18.5% of the housing is in a price range below $300,000 that is affordable
     Buyers have difficulty          to the average worker. Generation Y which is just reaching the start of their home
     saving down payments and
     qualifying under conven-        buying years will require a significant increase in the amount of entry-level housing
     tional financing.               to satisfy the needs of this large population cohort.



     2 Alternative Finance Programs Critical for Entry-Level Homebuyers
     Financing programs              Construction of entry-level housing for first-time buyers has been rather limited
     designed for first-time         given the high cost of development. Very little entry-level housing (rental or for sale)
     homebuyers is critical in
     high cost communities.          has been built. Fortunately, banks, mortgage lenders, and governmental assistance
                                     programs have stepped in to create financing programs for first time buyers. The
                                     California Housing Finance Agency has a number of programs available to local
                                     residents with a list of 20 lenders and 35 offices throughout Contra Costa County.
                                     A number of cities provide assistance and information about financing programs
                                     for first-time buyers.


     3 Majority of the Workforce Cannot Afford the Median Priced Home
     Unless there is an adequate     The typical worker in Contra Costa County earns less than $75,000. Almost one-
     supply of affordable            third (27.5%) of the households with a working age population (25-64) earn between
     housing, the providers of
     some of our most essential      50% and 120% of the AMI. This income group is neither poor enough to have
     services - police, fire,        access to assisted housing programs, nor affluent enough to afford the median
     teachers, and nurses, will      priced home. An elementary school teacher's or police officer's salary alone is not
     be unable to live in the        sufficient. Often two incomes are required to qualify for a home loan. Housing cost
     community they serve.
                                     for households in this income bracket must be between $868 and $2,085 per month
                                     to be affordable. Less than 20% of the County’s housing stock is available in this
                                     price range using conventional financing.


     4 Housing Options for Seniors
     The Baby Boom generation        The number of seniors who are age 65 and older is expected to more than double
     is blessed with a variety of    over the next 25 years from 110,713 to 263,722. A large percentage of them
     housing options as they
     enter their retirement years.   (29.4%) are low income. Local cities will have to deal with a growing demand for
     In addition, the senior         residential care facilities, home remodeling, in-law units, assisted living, age-
     housing industry also           restricted, and other housing options for seniors. Although there are a wide variety
     provides healthcare, meals,     of housing options available, ranging from independent living to skilled nursing
     housekeeping, trans-
     portation, personal care,       facilities and active adult communities to congregate care, most seniors, if they can
     and other support services.     physically and financial afford to, would prefer to remain in their own home for as
                                     long as possible. Transportation, housekeeping, personal care, and other support
                                     services for in-home care of seniors will become increasingly more important over
                                     the next several decades.




29
         1 Less than 20% of Housing Supply is Available to Average Worker                                                                                                                    3 Most Workers Cannot Afford a
                                                                            PERCENT OF HOMES IN PRICE RANGE                                                                                             Home in Contra Costa
                                       0%                              5%                             10%                     15%                         20%                      25%
                PRICE RANGE
                                                                                                                                                                                                  Median Priced
           Less than $200,000                                    6.4%                                                                                                                                Home with
                                                                                                                          Price Range Affordable                                                   conventional
                                                                                                                          to Average Worker                                                          mortgage.
     $200,000 to $299,999                                                                       12.1%
                                                                                                                                                                                                       Monthly
     $300,000 to $399,999                                                                                                         18.7%                                                              Payment:         $2,500
                                                                                                                                                                                                        $2,935
     $400,000 to $499,999                                                                                                               19.4%
                                                                                                                                                                                                                                     30% of Gross
     $500,000 to $749,999                                                                                                                                       23.8%                                                                Monthly Income
                                                                                                                                                                                                $285,000                             equals ...
     $750,000 to $999,999                                                                       12.6%                                                                                          Home with              $2,000
                                                                                                                                                                                             conventional                            $1,961 - Fire Fighters
           $1,000,000 or more                                     7.0%                                                                                                                         mortgage.                             $1,870 - Police
                                                                                                                                                                                                 Monthly
         Source: U. S. Census Bureau                                                                                                                                                           Payment:
                                                                                                                                                                                                  $1,819                             $1,612 - Installation/
                                                                                                                                                                                                                                      Maint. Workers
                                                                                                                                                                                                   $437,500           $1,500         $1,571 - Teachers
                                                                                                                                                                                                  Home with
         2 Alternative Financing Improves Affordability for First-time Buyers                                                                                                                     alternative                        $1,372 - Production
                                                                                                                                                                                                   financing                          Workers
                                                            House                                                                                              Monthly                              Monthly
         Income              Financing                      Price Mortgage Amount                                                                              Payment                            Payment:                           $1,293 - Nurses
                                                                                                                                                                                                      $1,687
                                                                                                                                                                                                                      $1,000
          60% AMI            Conventional $204,000 $163,250                                                                                                      $1,042

          Median             Conventional $331,500                                                     $265,200                                                  $1,695
                                                                                                                                                                                                                                     $620 Ambulence
          Median             Alternative            $437,500                                                       $350,000                                      $1,687                                                              Drivers
                                                                                                                                                                                                                       $500
          Comparison:
            Median Priced Home                            $575,000                                                                $460,000 $2,935
          Source: Craft Consulting Group analysis                                                                                                                                                                                    Source: California
                                                                                                                                                                                                                                     Employment Development
                                                                                                                                                                                                                                     Department




         4 There is a Growing Demand and Wide Variety of Options for Senior Housing

                                                                                                780                           Solano Co.
                                                                                                                               tra Costa Co.
                                                                                                                          Con
                                                                            Crockett



                                                                   Rodeo
                                                                                                          2,716                                               Pittsburg

                              727                     Hercules
                                                                                  4                   Martinez      680
                                                                                                                                                      4

                                                                                                                                                                                                                                Bethel Island
                                               Pinole
                                   San                                                                                            242
                                                                                                                                                                                             Antioch
                                  Pablo                                                                                                                                                       4
                                             80                                                                                                                                                            Oakley
                                              El Sobrante                                                          Pleasant
                                      355                                                                             Hill              Concord
                                                                                                                                                                                                                    738
 Marin                 580
                             West County
                             Richmond
                                                                                                                           1,124
                                                                                                                                                                 Clayton
                                                                                                                                                                                                                     Brentwood        542
County                                       El Cerrito



                                                                                                       Lafayette
                                                                                                                    24
                                                                                                                              Walnut Creek                                                                          East County       Discovery Bay
                                                                                       Orinda
                                                                                                                                                                                                                                 4

                                                                                                                                                                   Contra Costa County
                                                             Berkeley                                 Central County
                                                                                                       Moraga
                                                                                                                                 680
                                                                                                                                                                   0                     5             10 Miles
                                                                                                                                                                                                                        Byron
                       Assisted Residential                            24
                                                                                                                                Alamo
                                                                                                                                                     Diablo



                         Living Care Oakland                                                                                        Danville
                          Units Units                                                                   Contra Co
                                                                                                                  sta Co.
                                                                                                                                                                       Blackhawk

                                                                                                         Alameda C                                                                                                                     o.
                                                                                                                    o.
                                                                                                                                                     536                                                             Con
                                                                                                                                                                                                                         tra
                                                                                                                                                                                                                             Cos
                                                                                                                                                                                                                                 ta C
                                                                                                                                                                                                                                    o.
                                                          Alam
                                                                 eda                                                                                   280                                                              Alam
                                                                                                                                                                                                                             e da C

                                                                                                                                                 San Ramon
                    San
                 Francisco
                                                                                                580
                                                                                                                                             South County
                                                                                       880
                                                                                                                                                                                                                                            580

                                                                                                                                                                        Dublin
                                          San Francisco Bay                                                                                    580
                                                                                                                                                                                                                                                         30
                                                                                                                                                                            SOURCE: California Registry Housing and Health Care Database

				
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