Fairfax County is now developing a program called the "Silver Lining" program to help 100 first-time home buyers to purchase foreclosed houses (via below-market prices and low-interest mortgages).
[C]ounty housing officials have proposed spending as much as $6.4 million over two years to help such middle-income professionals as teachers, police officers and firefighters afford the region's housing. With county loans, qualified buyers would be able to purchase the properties directly from participating banks at below-market prices and be eligible for low-interest mortgages.Here's Chairman of the County Board of Supervisors, Gerald E. Connolly (D)'s rationale:
"We're stabilizing the plummeting price of homes and also helping stabilize neighborhoods."
So, let's see here. Home prices are plummeting, so part of his goal is to help prop them up and keep them unaffordable for teachers, police officers, and firefighters. BUT, those folks will get financial incentives to pick from houses the county government chooses for them, after they're fixed up with formica countertops, cheap carpet, and neutral paint (I wonder which county government employee get to pick out the colors?)
Even better, Connolly is hoping the county's program becomes a national model.
26 comments:
I'm somewhat more sympathetic to this kind of idea than I am to the thinly disguised bailouts discussed in Congress.
There is a strong social benefit to getting those foreclosed homes occupied and cared for. That's one good argument for letting prices fall as rapidly as they have to in order to make those homes attractive to potential buyers. That's why these large-level bailouts to foolish buyers are such a bad idea.
But the need to get those homes occupied provides a good argument for giving selected people some subsidies for buying those homes. I would think police, firefighters and teachers are statistically more likely to actually care for their homes. In addition, the mere presence of policemen and firefighters living in a neighborhood generates more safety in that neighborhood. That's particularly important in those neighborhoods where masses of foreclosures could attract opportunistic criminals.
The real story...the county will do anything to maintain property tax revs....
"So, let's see here. Home prices are plummeting, so part of his goal is to help prop them up and keep them unaffordable for teachers, police officers, and firefighters."
I don't know what all the complaining about is in regards to police, firefighters and teachers not making enough money in Fairfax County.
I know of more than a few Fairfax County Firefighters that made over 150K last year....I can't speak for Police and Teachers. Although, I would bet there are more than a few cops living in high cotton because they can get overtime like the firefighters.....teachers are not so lucky.
"I know of more than a few Fairfax County Firefighters that made over 150K last year....I can't speak for Police and Teachers. Although, I would bet there are more than a few cops living in high cotton because they can get overtime like the firefighters.....teachers are not so lucky."
I problem with this whole idea is that they are trying to spend taxpayer money to prop up the housing market... by subsidizing housing for a certain segment of the population. It is just a dumb idea all around.
The solution to their problem is to just let the market correct. Once prices have returned to reasonable levels they won't have to worry about offering handouts.
Instead, in typical fashion, they are planning to fight the market in an attempt to keep prices inflated... which would just exacerbate the affordable housing problem and waste a lot of taxpayer money.
I think the county would add more value by examining why certain areas are more blighted than others, and think of ways to redevelop them to make them more appealing and livable. They complain of crime (it's their job to take care of that anyway). This is perhaps too simplistic a view of things, but this seems to me like the perfect opportunity to perhaps re-zone or re-develop neighborhoods if there's something about them that's so undesirable.
Instead, you're going to have fixed-up foreclosures but the areas might still remain "bad". There were areas of Sterling Park that just never got off the ground for years. I think it's mostly to do with poor planning that made them undesirable in the first place.
I voted against Connolly before and I'll vote against him again.
Harriet, that is a very good point but it is extremely unlikely that Fairfax County would ever actually look closely at that, because it might mean they had to face some un-politically correct facts. Esp. with Gerry's tough primary challenge from the left this year to replace Davis.
Though, to be fair, Sterling Park is in Loudon.
narl,
You're right about that. It's politically incorrect to bring up redevelopment -- one tends to hear screaming about builders and politicans. Easy access to mass transportation is another big political problem.
novawatcher,
You're obviously not in the constituent group Connolly (D) is targeting. Who do unionized police, firefighters, and teachers support and vote for?
This has more to do with his primary challenge than the general election, as the RPV has decayed so bad that Davis' seat will be an easy Dem pickup.
So we need to use taxpayer money to keep real estate prices high, AND we need to use taxpayer money to help people buy real estate because prices are too high.
narl,
You're right about Sterling Park being in Loudoun.
Those areas of Herndon and Sterling (out Route 7) were running together in my mind.
From the article: Fairfax foreclosures: 198 in 2005 and 4,527 in 2007. "Most of the foreclosures are clustered in Springfield, Herndon, Centreville and the Route 1 corridor".
Yay, government housing here we come. More power and control to the government. Fewer rights and privacy to the people.
Now the gov't will control the market. Wait I though this country was supposed to champion the free market?
This country is depressing.
Teachers and fire fighters dont want this. They want a fair wage and fair housing prices to they can buy a house just like anybody else.
hahaha
teachers and firefighters wont want to live in these mold infested properties
taxpayers will be left footing the bill on these empty properties anwyays
What a stunt!
Connolly is simply another political candidate talking about an idea. Only in this case, his "proposal" hasn't actually been submitted to the county board of supervisors for review...so he's really just talking out of his head to a WaPo reporter.
Now of course, Connolly SHOULD be worried about falling property tax revenues...especially since the county has already projected property values to fall another 10% during 2008, but his pie-in-the-sky proposal to help 100 "middle-income" county employees, will hardly make a dent in the THOUSANDS of foreclosed properties now blighting Fairfax neighborhoods.
Rather than seeking newspaper headlines with his "help a little old schoolteacher buy a home" proposal, Connolly OUGHT to be explaining to Fairfax county taxpayers what he is actually doing to cut the budget in light of drastically reduced tax revenues.
Gerry Connolly -
Good Politician...Bad Manager!
stealth4 said:
"Teachers and fire fighters dont want this. They want a fair wage and fair housing prices to they can buy a house just like anybody else."
Very well said. I hear politicians in the District making the same proposals. I always counter them with "Just pay them what it takes to get them to work here and let them decide how best to spend it." But like Harriet pointed out, the problem is that it helps get votes.
There has been a HUD housing program for many years,
called... Officer and Teacher Next Door Program. It allows teachers and officers to purchase HUD housing at 1/2 the cost, YES 1/2 the regular HUD price.
However, it is only in special areas and not open to all HUD housing. These areas are RAMPANT with crime. Go to a HUD site and preview some of these areas and prices.
So, this program, is really saying these areas open in Fairfax are slums.
I'm reminded of what Maria in the Sound of Music said about her ugly dress: "the poor didn't want this one".
I know of a lady living in dire straits, but on her own terms. She tried local government housing but was scared of the neighbors.
The problem is possessing skills or experience aren't a prerequisite to getting elected to public office. Telling people what the want to hear is. Perception can easily overshadow substance. Look at what is happening to poor Hillary.
Speaking of which ... Leroy talks a good game. But the proof is in the pudding ... ;)
I was flipping through cable this evening and saw a local PWC board of supervisors meeting with a subtitle of "Foreclosure Task Force" so I stayed to watch.
They were presenting about a new program to help entry-level county employees (including but not limited to safety and teachers). Apparently it involves appropriating up to 5% of the county's $1 billion investment fund towards 10-year CDs at certain banks. The proceeds will be used to offer the employees lower interest rates for up to 10 years, or until they stop working for the county. This will create more affordable housing quicker, without affecting the true sales price.
The investment will be made simultaneously as the closing. For example, Person 1 buys a 200k house at 6%, so PWC buys 200k worth of 10-year CDs at 4%, and Person 1 pays 5% interest for up to 10 years, or until they leave county employment. (This would save about $130/mo. in payments.) If they leave before 10 years, that money can be reallocated to support a different person. No up-front investment required, and the county isn't getting into the property rental/investment business like Fairfax sounds like they are.
Interestingly, the Supervisors were bashing Connolly's program in comparison. This one would let the employees purchase real homes (any home they want) at arms length dealing with regular banks and still be free to do as needed (move, change jobs.) It also is no risk to the county (since the CDs will provide rate-of-return no matter what) with minimal administrative overhead and does not use taxpayer money, only the existing investment fund. It's also only open to entry-level employees (based on salary or salary+overtime? don't know), so it should help the right people.
WashPost mentioned this Home Help program:
http://tinyurl.com/3n97ew
One more tidbit from the Board of Supervisor meeting -- the guy presenting was asked how many of the foreclosures were speculation homes. He hesitated a bit and said he doesn't have a source because it is hard to tell, but estimated about 40% of foreclosures were spec homes.
Horrible idea, and rather discriminatory. Why are only certain professions deserving of help? Why not military men and women? And young engineers and dentists? And store clerks?
Teachers in this county can do very well, beginning at $45,000 a year for 3/4 year work, straight from college with a BA or BS degree. What other college graduate begins at that salary for part time work? Teachers can work up to administration, and make well over $100,000. Currently the county has 13,000 administrators and only 7,000 teachers, so most teachers DO move up to administrators. Retired teachers make more money than a retired General or Admiral. They retire in their early 50's, at 90% of their pay. Not a bad deal at all.
I see NO good reasons for the county to be involved in this AT ALL.
This url takes you to the PBS news piece last night about Prince William County foreclosure plan http://www.pbs.org/nbr/site/onair/transcripts/080520c/
It uses their bond debt to leverage the mortgage placements.
Susan said
Horrible idea, and rather discriminatory. Why are only certain professions deserving of help? Why not military men and women? And young engineers and dentists? And store clerks?
Teachers in this county can do very well, beginning at $45,000 a year for 3/4 year work, straight from college with a BA or BS degree. What other college graduate begins at that salary for part time work? Teachers can work up to administration, and make well over $100,000. Currently the county has 13,000 administrators and only 7,000 teachers, so most teachers DO move up to administrators. Retired teachers make more money than a retired General or Admiral. They retire in their early 50's, at 90% of their pay. Not a bad deal at all.
I see NO good reasons for the county to be involved in this AT ALL.
I agree Susan.. let's let market values dictate! They're falling rapidly and these people will be able to afford shortly anyways.
Why would they want to buy now at the inflated market value.
The reasons they pick Teachers and officers instead of engineers or dentists is because slum residents need education and policing.
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