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Posts Tagged ‘housing’

Federal programs on rural housing should have options to suit the real world needs of the people.  President Obama’s UDSA is very active in improving the quality of life in rural America; so I tip my hat to everyone involve from Secretary Tom Vilsack to local office specialists.  We shouldn’t forget the authorization and appropriations of the U.S. House and Senate.  However, I would love to see a little flexibility in rural housing programs.

The Direct Rural Housing Loan Program seeks to get low income people into new homes.  We know that the economy is stimulated when new houses are constructed and that home-owning families are the backbone of our nation. To my understanding, this program would put a family with an income between 20 and 30K in a house between 90 to 124K.  The highest cost house would be a net zero home, a home with advance energy technology that zeros out the utility bill.

While that concept sounds wonderful, everyone can’t afford wonderful.  To me, your financial obligations reflect your pocket and that goes for car, children and homes.  If you grew up struggling, your mentality should be that of Scarlett O’Hara when she said, “As God is my witness, I will never be hungry again.”  Okay, invoking Scarlett is being a little dramatic but low income people should have a preoccupation with building wealth (nest egg) and living inside their means—everyone should.

When a family has more house than they can comfortably afford, it’s called house poor.  Of course, USDA has guys smarter than me calculating affordability.  However, 20 or 30 years is a long time for a person to service a “house note” when their income is from a job rather than a more stable career.  Current families are often single parent or one income so that’s one layoff from housing disaster.  Actually, the recent mortgage crisis was exacerbated by the fact that unemployed people with houses didn’t have the mobility to search for employment elsewhere.

I grew up in a small community of USDA and VA homes and the general rule to me is double your income—a house should comfortably cost twice a family’s income.   For example, a single mom with an income of 25K can afford a 50K home.  That amount won’t get you a new home other than a mobile home.  Mobile homes can be really nice but we are too close to the hurricane region.  If I had a trailer, you can best believe I would brick it up…I know, not a good look.

In rural Georgia, 50k will get you an older home but the headaches will come from concerns about the bones.  Bones of homes to me are the foundation, wood framing, roof, plumbing, electrical, etc. and that’s before worries about energy cost from HVAC, windows, doors, insulation and dated appliances.

USDA should better market their current programs to qualified citizens. If they find a considerable amount of surplus funding, a program should be created to help people retro-fit older homes…perhaps homes in the family.  Grandma passes away and the family wants 30K for her 1980s USDA house.  The new owner could do a 20K energy-based renovation and still have a house for half the cost of the earlier mentioned USDA program.  I think some agencies in the federal and state governments are doing this now.

I would take an older house on a concrete slab and go to work.  If the house has siding, I would remove it and put in state of the art insulation.  The best colleges and technical schools should be researching ways to blow foam insulation under the house, in the roof and into exterior walls.  The answer might be gutting the drywall inside the house to create a proper insulation shell from the inside.

In rural counties, more families are moving out into the county and that’s nice.  Often, the county seat is a town left to slowly decay but it shouldn’t be that way.  Those older homes could be a first step for some families and they can pay off that house then get a new home later.

My high school Economics teacher was a Vietnam bombardier and had a master’s degree.  When he looked into how much the house he wanted would cost, he went to the technical college at night and on the weekend to learn construction.  Mr. Tomlinson reduced the cost of his house considerably by putting in that work himself.  In Georgia, we have an excellent technical college system and the presidents of those institutions display amazing flexibility regarding community needs.

These schools and the four year regional colleges once had active continuing education programs.  We need a short-time certification program that would prepare a homeowner to do demolition, insulation and certain other tasks on a renovation.

I can read faces and some families are reluctant to tell USDA housing officials that certain programs are a little too rich for their blood.  These families don’t know that the Clinton Administration was and the Obama Administration is all ears….let them hear from you and let’s get working folks into affordable homes.

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Everything starts at home…everything.  Many of the biggest issues facing people in our community grow from weak “home training” and no sense of personal economics.  An individual and/or family should operate like a small business.

I personally love the idea or mindset of applying principles from the business, industrial, commerce and corporate worlds to home life..i.e. Risk/reward, cost benefit analysis.  Investing, training, research, development, risk management, savings, financial foundation, marketing and human resources are all aspects of a sound, healthy family. Hey, some families might actually have a business plan or mission statement.

Investing= college cost, homeownership.

Training= etiquette, faith walk, nightly dinner table discussions and family updates.

Research= what are successful families doing, Do it Yourself home improvement, useful television.

Development= building stronger kids, parents who learn from others’ wisdom, family sacrifices for career opportunities.

Risk Management= nipping problems in the bud, surrounding family with positive people in heathy environments, particular about school.

Savings/Financial Foundation= untouchable nest egg, the retirement program at work, struggle-free living (living inside means, paying this month’s bills with money earned four months ago).

Marketing= human marketing is networking, being around positive constructive people who witness your solidness, dating people who enhance your life.

Human Resources= using the utmost care regarding who you bring into the small business (family members are new employees/partners.) New people come in after an exhaustive interview process and detailed research of history and experiences.

Home Ownership:   The American dream is having a piece of God’s green earth; land, they aren’t making any more of it.  Some people go from the cradle to the grave without developing a desire to own a home (well, grave would technically be owning land.)

A house is the second biggest investment for most people (children being the first in my opinion.)  On Capitol Hill, housing was one of my issue areas but more importantly, I taught a first-time home buyers class as part of my duties with a south Georgia community development corporation.   While a HUD-provided video explained the fundamentals to the participants, I knew this stuff from hearing my daddy constantly advocate for home ownership.  He was a good agriculture teacher but his forgotten legacy was selling lots in our subdivision in the early 1970s. In retrospect, this housing development should have been Black-owned but  the Lord knows it was progress for people to own their first house, their second greatest asset.

Daddy’s first rule was “when you rent, you are buying property for someone else.”  His second rule would have been “with a stable income, buying a house is actually cheaper than renting and the place goes up in value.” When I was about 9 years old, my daddy pointed at a new Cadillac parked next to a shack and asked me what was wrong with that picture; talk about your teachable moments.

Many families in my subdivision are living in houses that were paid off 20 years ago.  Others have moved to snazzier communities but the rent money from the “home house” is investment income.  Oh, it’s not all rainbows and butterflies in the “Sub;” we have our “come on now” drama.  Barbecuing in the front yard—come on now.  Pulling a car engine with a tree in the front yard-come on now.

I like the idea of a person buying a duplex, living in one side and the rental money from the other side covers most of the note.  That situation feels financially magical.

Means: We must live within our means because those who bite off more than they can chew will choke.  One of my favorite movies is “It’s A Wonderful Life.”   My man George Bailey was a hero for getting so many people into homes and wanting to see them actually make the final mortgage payment.

The recent housing crisis in America grew out of having fewer George Baileys.  People were buying more house than they could afford.   They were actually factoring in the future appreciation of the properties.  In other words, they were counting their eggs before they hatched.

Struggle, Stretch, Strain: Yes, some people seriously believe that struggle will always be a part of life but that’s hogwash.  You struggle when you put more on your plate than you can comfortably handle.  As a result, these people are constantly stretching their money and that produces a financial and emotional strain.

Conspicuous Consumption/Bling: the slang term “bling” defines the shiny, flashy items that small-minded people want to make them feel better about themselves.  Wiser folks, those less shallow, have spending habits and budgets that reflect a smart financial plan and personal determination.  For example, a person making $10 an hour can purchase a $20 shirt, double their hourly wage.  But, that same person wearing $90 shirts is foolish.  I bet that person doesn’t have $1,000 in a saving account.  Yes, reasonable people have a problem with folks in the public assistance office in Polo and Versace.  We are talking about young parents who would put $3,000 rims on a $2,000 car that smokes like a chimney.

We need to stop making Michael Jeffery Jordan richer.  Your child has Jordans sneakers but isn’t old enough to walk.  Your teenager wears $200 Jordans but isn’t on the varsity; his crew wears them to play video games sports while watching you clean the house and wash the car.  Oh, what about the adult with Jordans and a matching $30 Starter cap at the bus stop.  $1000 cars can still be found but they wouldn’t be caught dead in a struggle buggy.

Lump Sum: First, most people should thank heaven for putting us around role models with knowledge and wisdom.  Then, we should thank ourselves for being smart enough to listen.  Struggling people who work every day might receive the Earned Interest Tax Credit.  President Richard Nixon started the EITC because he felt working people in America shouldn’t be below the poverty line.  So, this credit gives workers the amount taken for taxes during the year and adds enough money to the refund to bring that person or family up to the poverty line.

maury1

Smart families live below their means, avoid bling and put most of that EITC money away.  After a few years of saving, those families have the income history, decent credit report and down payment for a house of their own.  Hey, USDA, HUD and other governmental programs might get them into homes with little or no down payment.

http://www.rd.usda.gov/programs-services/single-family-housing-direct-home-loans/ga

It warms the heart to think about people turning adversity into prosperity.  From a better house in a community with better schools, the next generation of that family (the current kids) can go to college, move up in a job that requires technical school training or see the world in the military.  A family that will hopefully never struggle, stretch and strain again.

Housing video links

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Mobile homes are amazingly wonderful these days but in South Georgia we have tornados from hurricanes; you don’t want to be in a home that is mobile.  Why can the manufactured homes industry push for houses that arrive on trucks in sections or pods and are then assembled with stronger roofs and exteriors? Watchers of HGTV know that the Japanese are doing pre-fabs in aircraft hangers with a reduction in waste and cost.

My father use to question why someone would have a new Cadillac parked in front of a shack or next to an apartment.  Did he know that I would be approaching fifty without owning my first house—even a shack.  I have got to get me one of those shacks.  Actually, a modest bungalow or cottage that I build in part myself is my plan. The internet is full of webpages for companies doing interesting things with pre-fabs.

We must change our mindsets about homes and not let the housing industry drive us into the poor house like the auto industry and fashion world.  Conspicuous consumption or “keeping up with the Jones” is a dangerous thing.  The subdivision community that popped up in the late 60s and early 70s in the south emphasized ranch homes with formal dinner and living rooms—those rooms we could only enter on holidays.  Today, homes with great rooms better serve American families. 

I know people overseas who would never put T.V.s in their “bed” rooms because the bedroom was made for sleeping and dressing; they live in their living rooms.  In the Mc Mansions that helped created the housing crisis here, people have big bedrooms plus several living rooms, dens or studies.  Huh? I like the families that planned their housing size and cost with their real needs in mind.  For example, a couple with two high school aged children and one in junior high shouldn’t give each kid a room in the new house since every kid will likely be gone in a five years; maybe the oldest kid could have a room that will become a study or den. 

We hear shocking stories about ball players in the A.T.L. building super-sized homes without consideration for the upkeep cost after their playing days. But, regular families need to think about the expense of heating and cooling large homes in retirement also or after one spouse is gone.  Older couples should build houses with wheelchair accessibility in mind and think about stairs. If I actually had money and wanted a big house, I would design the structure with the idea that I could convert it into a duplex if I reach old age.  The house could generate some retirement income, I would not be alone from the security standpoint and I would be free to chill in a second home in some affordable Caribbean spot for months at a time.  I love it when a plan comes together.

I also love seeing people retire and move back to the South.  Folks often sell their northern homes (too cold up there), buy a small place in the hometown and pocket a nice chunk of money.  Of course, they are concerned with the racial climate rather than the climate climate.  It can get cold down here in other ways but many discover that the vibe is smooth than expected but the urban drama of crime and drugs is here also.

We know about planned communities in Florida and other retirement areas but what about smaller, affordable versions in southern towns.  I have always like those bungalows communities that grew when the troops returned from World War II but modern versions could be within walking distance of old downtowns and feature duck ponds with walking paths; retail spaces and eateries; and lofts, apartments and modest homes. 

We must emphasize the importance of building homes we can comfortably afford.  The formula charts in the real estate section of my local newspaper say a person with a gross income of $24,000 can afford an $81,000 home.  I don’t half trust these real estate and banking people because they are nothing like my man George Bailey in the movie It’s A Wonderful Life.  George and the old school guys lived in the community and wanted to see people actually own their homes; they looked forward to mortgage note burning parties.  Today, the industry is structured in a way that guys get their money at the beginning and if you go crazy trying to meet the monthly payment that is tough luck.  You made your bed and you must sleep in it.

It’s better to own a modest home than stress over a big house.  If you work overtime or two jobs to put your family in a large house, you missed precious family time and if you don’t raise your kids the streets will.  You can’t get that fishing time, nightly sit down dinners or school events back.  Those teens are in those big rooms in big houses watching big T.V.s teach them how to get into big trouble.  One thing about little houses is that people learn how to get along and those cool evenings of bonding on the front porch are priceless—think Mayberry.

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Between the NFL game and the reality game Survivor’s Finals, I watched a segment on CBS’s 60 Minutes about the second wave of mortgage failures—my mouth down open. Drama on T.V. shows can be interesting but this mess will be all too real.

If you brought a house with an “adjustable ARM” loan and were not prepared for the agreed adjustment, you have issues. Here’s the simple “country common sense” formula: double your gross income and that number is the amount of house you can comfortably afford at this time. i.e. Income 45K…House 90K.

Those people to speculated that their house would increase in value before the ARM adjustment and the new equity could offset…bla …bla…bla…

Bottomline: you rolled the dice and crapped out. And the idiots who gave you the money are (well) idiotic—that basement where you could actually practice tennis with someone, that was the size of the house you need. Also, real estate people who push the market value of homes higher for their own personal gain should be assume and when the bubble burst, they must share the blame.

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