20% DOWN PAYMENTS ON MORTGAGES MAKE FIRST TIME BUYERS UNABLE TO BUY WITHOUT ENOUGH AFFORDABLE RENTALS, CONDOS, CO-OPS, SINGLE FAMILY HOMES.
WPCNR COUNTY-CLARION LEDGER. By John F. Bailey. March 16, 2023:
The Westchester County Executive proposed an alternative to Governor Kathy Hochul’s Housing Compact proposal that would override local zoning power of communities.
The County Executive said local control of zoning is the right of every hamlet and metropolis. He felt you could still set quotas per community for affordable “workforce housing,” that would preserve town, village and city control of their own zoning, that the Governor has said is preventing New York State from meeting housing needs.
Currently the legislature responding to suburban community leaders’ outcries at the overriding of zoning codes by the Governor’s proposal, has pronounced the plan dead on arrival, rejecting overriding of local zoning to build affordable housing stock, and the requiring a 3% percentage of affordable housing building in communities lagging behind the percentage.
Dan Murphy of Westchester Rising asked County Executive George Latimer in the Q. A. portion that usually ends Mr. Latimer’s Monday News conferences, asked him to “comment” on Governor Kathy Hochul’s proposed Housing Compact bill and the County Executive gave a solution:
The County Executive introduced something completely new. See his complete remarks on the Governor Hochul Housing Compact and how he thinks the zoning issue can be resolved Click the red box and watch.
He said he is aware that many families are upset their children cannot afford housing in the towns they grew up in.
He said the Governor’s goals could be achieved without overriding zoning. He suggested the governor turn it over to the communities to come up with deciding how the communities could add affordable housing in their communities and where they would be built without compromising the character of the communities.
The effect: turning over the decisions on how affordable housing goals could be met (in keeping with the character, land availability and infrastructures of each town) by challenging the communities that lag in affordable housing to come up with their plans. How much time would they be given? How does the governor feel about this? How do the “anti-Hochuls” in her own party feel about that?
He is right.
The current state of the “recovery” where financial conditions change day to-day, where advisories are changed 100% from the day before, and stats are pumped out every week, up one day, down the next from Washington affects people trying to improve their lives and build a living profoundly.
The bank mortgages have risen dramatically by the Federal Reserve raising interest rates. Let’s take a look.
Professionals such as teachers, police, firefighters and young workers starting their careers (burdened additionally by student loan debt) do not have the incomes to save the money to afford the Westchester housing market.
The down payment on a 30 year mortgage is 20% in the metropolitan area according to Mortgage lenders statistics. What do you need to buy a 2-4 family home, condo, co-op and single family home on s 30 year mortgage?
Can you save a year’s salary to get a downpayment?
The average price of a 2-4 Family home at the end of the third quarter of 2022 Hudson Gateway Association of Realtors statistics was $735,000, requiring a down payment of $147,000 upfront.
The average cost of a single family home, at a median price of $872,000 at the end of the third quarter, (meaning half of single family homes sold below the median price of $872,000 in the July-August-September third quarter 2022) can be as much as a couple’s two salaries combined.
Say you want to get a 30 year mortgage at 6% for a single home priced at $500,000 that’s a down payment of $100,000.
A $650,000 home requires a $130,000 down payment.
An $872,000 (middle market price!) the down payment of 20% is $174,000.
The condominium average selling price was $546,861, requiring a down payment of $109,372. However the median sales price of condos was $460,000 showing there are more in-range condos available on the market than half-million dollar condos. Nevertheless, the down payment on a $400,000 condo mortgage of 6% would be still be $92,000.
Co-ops were the best buy in the third quarter, averaging $239,000, but as with all of these ballpark quotes on down payments banks could be making better down payment terms or worse depending on how sound the banks feel about the property. Still raising $40,000 for a down payment on a Co-op is less a burden to raise for a couple than the condo, the mult-family or the coveted single family.
Affordability of the mortage depends on whether you can swing over $2,000 a month ($25,000 a year out of a $100,000 income, with the burden of property taxes, living expenses, loan debt, car ownership and food.
That first foray in home ownership is a nightmare of financial worry for the twenty and even 30-somethings.
You are at the mercy of the banks, the sellers.
Even if you rent, locally you are paying $2,000 and up studios, $3,000 and up for two-bedrooms. That is still $25,000 in rent…equivalent to a mortgage payment.
You are forced to share apartments if you are single.
To handle a rental of up to $2,000 a month for a studio or $3,500 a month for a two-bedroom apartment (in White Plains), or purchase a median single home even by the time they hit their early 30s, plus commuting costs, car payment, rent payment it requires a great deal of discipline to save for a down payment today.
They need about a 25% down payment to take out a mortgage for a median price home and $400 3 to 4 family homes just burdens them with a massive $300,000 mortage. The banks are reaping the market.
The very lack of homes on the market keeps prices going up or not coming down.
The Home Compact bill is the Governor’s plan to jumpstart funding and building affordable housing construction and setting mandates and quotas for New York State towns villages and cities which the state finds to be short in the availability of housing for young persons, professionals starting out, professionals such as teachers, police, firefighters “work force” housing.
The County Executive said that he felt Westchester has “moved beyond” the time 50 years ago when community zoning prevented housing in the county. He said he would vigorously defend the Westchester record still ongoing of providing housing for persons who could not afford current prices of homes.