Whole Foods halts plans!!! (Pittsburgh, Etna: high crime, unemployment rate, safe neighborhood)

[Paul2421]

Originally Posted by selltheburgh

The deferred mortgage actually makes a home affordable - whether new construction or rehabbed.

If a house costs a developer and the city 150k to purchase and develop or build new, but the neighborhood only supports values at 100k, it sells for 150k, but the buyer gets a 50k soft second mortgage that they only have to pay back when they sell. So the buyer essentially gets a 50k discount. The house goes back into the tax rolls, spurs development around it, etc. Statistically, the home owner will sell in 7-10 years and hopefully for 150k or more. The 50k gets paid back upon the sale and reinvested into another deferred 2nd.

I've been involved in a number of these and they work out pretty well. The help stabilize a neighborhood with low values while getting buyers into a quality home.

What happens if the house doesn't appreciate?

This is how bubbles form.....

[ferraris]

Originally Posted by Paul2421

What happens if the house doesn't appreciate?

This is how bubbles form.....

A lack of appreciation would only hurt if you decide to move, because that's the only time the deferred mortgage has to be paid back (besides death). SCR has talked at length about how he is not interested in living in a home for profit, so this shouldn't be a concern for him. The program is designed to stabilize neighborhoods immediately, by renovating dilapidated boarded up homes and slum lords. But it's also designed to stabilize neighborhoods in the long run, by incentivizing people to stick it out for the long haul, and not just living there as a "starter house" or until they can afford something better.

It's not a wide spread enough program to create a bubble. And having people underwater on mortgages that they don't have to pay is a lot better than empty, falling apart homes or slum lords.

[Paul2421]

Originally Posted by ferraris

A lack of appreciation would only hurt if you decide to move, because that's the only time the deferred mortgage has to be paid back (besides death). SCR has talked at length about how he is not interested in living in a home for profit, so this shouldn't be a concern for him. The program is designed to stabilize neighborhoods immediately, by renovating dilapidated boarded up homes and slum lords. But it's also designed to stabilize neighborhoods in the long run, by incentivizing people to stick it out for the long haul, and not just living there as a "starter house" or until they can afford something better.

It's not a wide spread enough program to create a bubble. And having people underwater on mortgages that they don't have to pay is a lot better than empty, falling apart homes or slum lords.

I agree for sure. As long as the program is kept in check it is an awesome opportunity...I am guessing we will hear a laundry list of excuses from the notable party...

[erieguy]

Originally Posted by Paul2421

I agree for sure. As long as the program is kept in check it is an awesome opportunity...I am guessing we will hear a laundry list of excuses from the notable party...

Exactly. You have to "want" to do it.

[selltheburgh]

Originally Posted by Paul2421

What happens if the house doesn't appreciate?

This is how bubbles form.....

No necessarily if done correctly. For example, if the house sells for 150k with a 50k deferred 2nd, the buyer has 100k between their down payment and 1st mortgage.

If they sell in 5 years and it is only worth 100k, then the URA loses their 50k after the homeowner pays their closing costs to sell.

The deferred 2nd can and has been transferred to the next buyer if they qualify (income, credit, etc) and the property still qualifies based on the original qualifying criteria.

I also think that the URA doesn't run such slim numbers. For example, the house might sell for 150k with a 50k deferred 2nd, but they are pretty confident that it would be worth somewhere i the middle of that. They already have a cushion to some degree.

The only slightly shady thing that I've seen with these has been a buyer who is "single" meaning not married and filing taxes individually, but they have a live in partner and they may or may not share all finances, but they definitely share living expenses. That 2nd income isn't used to qualify. On the other hand, the income limits for 2 people only goes up slightly for 2 people versus one, so it is likely adjusted for a single parent more than two working people.

[SteelCityRising]

Originally Posted by Paul2421

I agree for sure. As long as the program is kept in check it is an awesome opportunity...I am guessing we will hear a laundry list of excuses from the notable party...

Originally Posted by erieguy

Exactly. You have to "want" to do it.

I would appreciate not being referred to as "the notable party".

For what it's worth I've given up on the idea of buying a home. It's just not realistic for someone with my debt-to-income ratio, and since I've held a zillion jobs since moving to this city---none of which have paid >$30,000/year without overtime or working a second job---I'm realizing I just can't do any better with only a Bachelor's Degree and am going to save to pursue my Master's Degree.

I'd still like to know why the answer to rising rents in a city with a declining population has to be "shut up and buy because it's cheaper". Nationwide we're creating urban cores that are pricing out middle-class renters in droves.

[ferraris]

Originally Posted by SteelCityRising

I would appreciate not being referred to as "the notable party".

For what it's worth I've given up on the idea of buying a home. It's just not realistic for someone with my debt-to-income ratio, and since I've held a zillion jobs since moving to this city---none of which have paid >$30,000/year without overtime or working a second job---I'm realizing I just can't do any better with only a Bachelor's Degree and am going to save to pursue my Master's Degree.

I'd still like to know why the answer to rising rents in a city with a declining population has to be "shut up and buy because it's cheaper". Nationwide we're creating urban cores that are pricing out middle-class renters in droves.

Dude, just apply for the pre-approval. It's free and takes like half an hour. You just might be surprised.

[erieguy]

Originally Posted by SteelCityRising

I would appreciate not being referred to as "the notable party".

For what it's worth I've given up on the idea of buying a home. It's just not realistic for someone with my debt-to-income ratio, and since I've held a zillion jobs since moving to this city---none of which have paid >$30,000/year without overtime or working a second job---I'm realizing I just can't do any better with only a Bachelor's Degree and am going to save to pursue my Master's Degree.

I'd still like to know why the answer to rising rents in a city with a declining population has to be "shut up and buy because it's cheaper". Nationwide we're creating urban cores that are pricing out middle-class renters in droves.

Because buying a place will result in lower payments than renting and eventually, other than taxes, no house payment at all.

At some point you need to do something about it rather than blaming society for what's happening. Or perhaps find a city that still in the days of 2010.

[BrassTacksGal]

Or get a job that pays a college graduate more than $30,000 a year. Since most college graduates are making at least 2 or 3 times that amount at age 30, there must be such jobs. Even teaching pays way more than that with 11 weeks off in the summer. Go back and get a degree in teaching or nursing. Some Master's degrees aren't worth more than a BA degree, depending on the field. Or study up and become a CPA.

[tyovan4]

Originally Posted by BrassTacksGal

Since most college graduates are making at least 2 or 3 times that amount at age 30, there must be such jobs.

I think you're pretty far off of the mark with these thoughts.