Inexpensive way to help both homeowners and renters

Text of my letter to the editor, Bellingham Herald February 22 2012.

In some cities like Bellingham, there is a shortage of rental units leading to rising rents. At the same time, there are homeowners who are about to go into foreclosure because they can barely afford their mortgages. Why can't more of the homeowners take in renters to help pay the bills?

An extra income stream from renters is one way to help homeowners save their homes from foreclosure. At the same time it would provide more places for renters so rents could remain moderate. This could help solve two problems simultaneously.

In some cases, zoning would need to be changed from single-family residential to a less restrictive use that would allow a few rental units in the homes. It doesn't make sense to have much of the land area of our city used up in neighborhoods where the median price of a home is way above what the average person can afford. It also doesn't make sense for renters to face a housing shortage while single-family homes go empty and homeowners cannot afford the payments.

Given today's job market and financial situation, innovative solutions should be tried.

This article was in a recent Herald also about a shortage of rental properties in Bellingham.

Bailing Out Homeowners?

I hope they help renters also with the broader issue of affordable housing. More money for HUD.

Also they shouldn't just help current homeowners. What about those who have already been foreclosed on and are no longer in their homes? Back to square one.

How about people who never bought in the first place.

How about subsidizing more folks to become first time home buyers? Someone like me could buy a condominium if there was a $50,000 grant to help defray the cost. On my income, I could possibly put up the other $50,000 based on borrowing with house payments being around 1/3 my income. The grant would be a good boost toward the bottom of our local condo market which still hovers over $100,000.

If they want more people to be homeowners, let's get some new homeowners in the market. Grants for renters to become homeowners? Government pay half the mortgage? Then when you sell, the government's $50,000 investment would stay with the condo to keep it affordable for the next owner. There's actually a program like this that I read about.

What about the folks that have already had their homes foreclosed on? They are now out of the market as if they were starting over again. How about giving them money to get back into the market? Like giving folks money who haven't bought yet.

The Federal Reserve can just print up all this money. More money in circulation leading to inflation eventually.

Inflation across the general economy can bring everything up to the level that property values are still at, to a large extent.

Either that or property values will have to come down some more.

One should also ask, "is home ownership the holy grail of life?" Should everyone strive to be a homeowner?

Or are we better off finding other solutions for some people; like affordable rent?

I've had a good landlord so far.

Another solution to the housing debacle is to allow more renters in single family neighborhoods. Let homeowners rent out rooms to help pay their mortgages.

That could help both renters and homeowners.

These changes would have to be done at the local level, but Obama can use the "bully pulpit" to advocate this.

Allow more density. It could reduce commute times also as more people could afford to live closer to work. Reduce traffic. Save energy.

Bump up density in many of the current residential zones. Wouldn't be as much of a problem if people weren't so dependent on automobiles.

Traffic? Parking in the neighborhood? Cars in the front yard?

It wouldn't look so bad if it was bikes inside the house or people taking the bus.

So many things interrelate.

Let people rent their homes, help renters

Best homeowner bailout idea I've heard so far is to rent foreclosed homes back to the former owners. That's the best idea, if government bails out homeowners.

Since many homeowners are in a larger place than they can afford (often large carbon footprint) government can also encourage these people to take in other renters.

Mother in law apartments.

Helps pay the mortgage and utilities. Also provides more space for renters who tend to be "lower footprint" than owners.

Some zoning will oppose this in single family zones, but maybe it's time to reduce the amount of space devoted to single family; especially as our population and sprawl keep growing.

We need to encourage lower footprint lifestyles. Especially now since it's on the credit card; the federal deficit.

Here in Bellingham, there's a new "toolkit" that's been worked out by city government to manage things like mother in law apartments in single family zones. It provides some guidelines to facilitate a compromise between allowing more flexibility and protecting single family.

Problem is, I just read that a city planer has ruled this toolkit will not be used in single family unless the city council approves each application.

Toolkit may be rendered almost useless since it's application is restricted to higher density zones that already have that flexibility, even without the toolkit.

Efforts to help homeowners should include renters

One way to help both homeowners and renters would be to allow struggling homeowners to rent out space in their house for renters. This would provide more places for rent to help renters. Also help pay the homeowner's mortgage.

I'm sure this is happening a lot, but it runs amok of local zoning rules in many cases. Here's where zoning rules should be rethought. Federal government could encourage local communities to allow these solutions to happen.

The entire economy can benefit from availability of more affordable housing. In some cases this could mean higher neighborhood densities which also means shorter commutes.

I'm remembering "carbon footprint," "energy independence" as goals of an economy as well. Not just maximizing prosperity.

If the government ends up taking over foreclosed properties, here is one idea.

They could allow HUD to manage these properties and use them as rentals.

I hear people groaning. Stereotypes of welfare moms moving into neighborhoods and sinking property values still further.

Not that I wish to put people into poverty, but remember, many middle class and upper middle class have made out quite well on selling their home over the past years of this bubble. Here in Bellingham, we see affects of this wealth in the many retired and "retired early" folks moving here.

55 is the new 65.

Retire early if you sold at the right time. Sold, not just in California, but many markets.

The good news is, the spending power of these new retirees keeps our retailing economy strong in spite of the fact that we have lost much of our local industrial base, including Georgia Pacific, for instance.

The bad news is, it's harder to get onto that bandwagon for people entering the housing market, or even just finding an affordable place to rent.

Is the "home seller retire early economy" sustainable? Is this a distortion of our economy?

Much of this housing bubble has had the assistance of the federal government.

Programs have helped people get into homes over the years. After getting help, people have often sold their house for a huge profit. In some cases a profit created by the formation of this price bubble.

Assistance for being a homeowner could be rethought and turned into a "partial ownership" solution. Since it looks like political candidates are suggesting a raft of new proposals to assist home owners in the wake of the recent crisis it's time to have this kind of discussion.

Both McCain and Obama have various proposals.

Homeowner assistance programs should be redesigned to expect something back from people that get assistance.

Give something back, years down the road when the house sells.

This could help reign in those house value bubbles that damage the economy.

More than just wealthy bankers have profited from the bubbles. A lot of lucky homeowners profited if they sold at the right time.

Passing through town

He was following the map on my web site from Vancouver, BC to Seattle. Called me before starting his trip. Visited as he passed through Bellingham. Plans to ride all the way to San Diego where he plans to relocate. Was living in Seattle.

I say, "isn't San Diego expensive?" "He says he finds some good rent deals by running notices on Craig's List. Lots of people owning McMansions are needing revenue to make house payments. Good news for responsible renters where even places like San Diego can offer good deals. Sometimes it pays to just be a renter, with the help of Craig's List and a lot of homeowners out there needing to make house payments.