Affordable Housing In OC Not So Affordable After All

Everyone knows that California has some of the most expensive home prices across the entire United States.

During the housing boom, home prices skyrocketed throughout most of the state, especially in the Southern California area. Some people saw their home values double or even triple in just a few months!

Now, as the housing market slows, and prices are starting to drop, we look to see whether housing in this pricey area has dropped anywhere down towards Earth. And the answer is a resounding – NO!

Even in an affordable-housing development in a suburb of Orange County called Tustin, many potential homeowners found that they did not have enough cash to buy the home.

An October 18, 2006 article by Jennifer Delson of The Los Angeles Times, “New Tustin ‘affordable’ homes are anything but, critics say,” looks into the un-affordability of these so-called affordable homes.

“In Orange County's pricey housing market, even some winners of a recent affordable-housing lottery were too cash-poor to take advantage of their luck and buy a house — a situation one advocate called ‘ludicrous.’”

“Of 700 applicants, 143 winners in the development's first phase were called in late September to make sure they financially qualify to buy low-cost homes being built on the former Marine Corps Air Station site in Tustin.”

The properties in the development are priced between $55,100 to $311,400, which is well below the price of a normal home in that area. The reason why people are having trouble affording the home is because they require a down payment of almost 50 percent, which is a very large sum of money to come up with even if it is the lowest priced home.

The thing that is interesting about the situation is that the homes were originally advertised by asking for only a 3 percent down payment.

“But some buyers found that the down payments were nearly 50% of the purchase price. The large down payments were required to meet redevelopment requirements. State redevelopment law requires that occupants not use more than 35% of their incomes on monthly housing payments, which include the mortgage, taxes, insurance and association fees.”

Many of the prospective buyers for houses in this development felt extremely betrayed by the false information, since for some, this was their only chance to buy a home.

“The requirement for large down payments from low-income families ‘is ludicrous,’ said Crystal Sims, director of litigation at the Legal Aid Society of Orange County. ‘No low-income family has the money for a large down payment. It makes a joke out of an affordable-housing project.’”

To be eligible for low-income housing in Orange County you must have an annual income of less than $62,640 (for a family of four).

“With the median price of an Orange County home about $626,000, developers have enough qualified buyers of the low-cost units, even those requiring large down payments, so the developers won't provide any sort of financial assistance for those who don't have the down payment.”