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June 12, 2010

Affordable-housing awards -- and a debate point

Two local nonprofit developers won awards this week for their work on affordable housing in challenging times.

Homes for America, based in Annapolis, was named developer of the year by the Housing Association of Nonprofit Developers, which focuses on work from Baltimore to Richmond. Homes for America was honored for building three apartment communities for seniors on top of purchasing and fixing up two affordable-housing properties -- despite the deep freeze on financing.

Greater Baltimore AHC won an honorable mention in the "Affordable Housing Development" category for pulling off the rehabbing of a deteriorating Section 8 complex in Baltimore even as the financial crisis unraveled their original financing plans. (Read more about the MonteVerde Apartments project here.)

FDIC Chair Sheila C. Bair, speaking at the awards ceremony, suggested that the government has too long focused on homeownership at the expense of affordable rentals. Add up mortgage interest deductions, local property tax deductions and exclusions on capital gains from home sales, and "the taxpayer subsidies for homeowners are about three times the size of all rental subsidies and tax incentives combined," she said.

"In fact, you can argue that this huge subsidy for homeowners has helped push up housing prices over time, making affordability that much more of a problem for the very groups you're trying to serve," she added, according to the prepared text of her remarks. "I think we need a better balance. Sustainable homeownership is a worthy national goal. But it should not be pursued to excess when there are other, equally worthy solutions that help meet the needs of people for whom homeownership may NOT be the right answer."

Most homeowners taking the mortgage deduction would probably deny in angry terms that they're getting government subsidies, but of course a tax break is money in the bank.

As the country tries to figure out how to reshape mortgage markets, financial controls and the like, here's a discussion point for you: Should the federal government be incentivizing homeownership at all? If so, how?

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (6)
Categories: Affordable housing


I think it's crazy that you pay for a home inspection and if things fall through and you don't purchase the home. If someone else puts a contract on the same home behind you they have to pay for another home inspection. This is just another way to take your money. This should be to paid by the seller and reimburst at closing by whomever purchase the home. It should be the same with the HUD inspection, Home inspection and Appraisal. Purchasing a home is like having a 12 hour job and doing your 8 hours on top of that. I have days where I feel like I am about to loose me mind. You would think this is the first time for the agents that are selling the homes as well as you purchasing. You are jumping through hoops everyday. Purchasing a home should not be this difficult. HELP ME PLEASE! Someone need to resturcture the way this is done.

You know what the government needs to do to get more affordable housing? Nothing, absolutely nothing.

Laissez-faire socialism-the belief that current government regulatory, tax, and monetary policy works to actively transfer wealth from the bottom up, and ending such government intervention (laissez-faire) would lead to more income and wealth equality (socialism).

AND my understanding is that even if you are only refinancing, you have to pay for many of these "purchase" related things a SECOND time!

I disagree with Josh. Some of these requirements are reasonable and can sometimes protect buyer, but requiring multiple inspections appraisals, etc, on the same house is an industry-led scam. But in fact, the single most expensive item at closing is Baltimore's transfer tax, and then they tax it over and over at double anyone else's rate in MD after your in.

Did you know the gross margin on title insurance is almost 90%? Did you know the new appraisal law has increased the cost of an appraisal to the consumer, and shifted where that money goes away from the local appraiser who actually does your appraisal and to a huge, national middleman management company? Did you know it's a federal law that prevents the re-assignment of an appraisal so a new one must be ordered for each buyer and any appraisal the seller ordered would be worthless?

As for a home inspection, there's no law/rule preventing the seller from paying for one and making the results available Carfax style, but I think buyers would be skeptical of its independence.

One thing all the transfer costs do, taxes being second biggest to Realtor fees, is reduce the liquidity of the housing market.

Like most govt subsidies there are unintended consequences. People pay too much for homes, they buy bigger homes to get a bigger deduction. Incentives work like welfare, which causes economic excesses and poor deployment of life's resources.

Everything was ok until the US had to compete with Emerging countries that save rather than buy. Now we have to adapt to the new realities or suffer the consequences.

Because I was going by memory and on reflection it seemed too hard to believe...

A 2001 Kiplinger's article states: "Claims are so rare, in fact, that insurers spend as little as 5 cents to 10 cents of every premium dollar to pay them."

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie

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