UC Davis’ West Village Seeks To Break Ground

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In what an elaborate ceremony attended by many of the leaders on and off the UC Davis Campus, outgoing UC Davis Chancellor Larry Vanderhoef celebrated the culmination of a long process and the beginning of the construction phase of West Village.

Everyone joked as to how long the process took, but the planning began back in the 1990s as a means to provide affordable housing for faculty and staff while supplying additional housing for some 3000 UC Davis students.

In brief remarks the Chancellor said:

The project will be a showpiece of the university’s commitment to sustainability and help advance energy solutions…  Those who are helping to create West Village, those who will call it home, all of us — we can take great pride in how West Village will demonstrate the best in community living and stewardship of the environment…  My motivation was to keep UC Davis a place where faculty, staff and students can continue to live locally and benefit from everything our campus has to offer.

West Village is slated to be built in two separate phases.  In all, it will provide housing for roughly 4,350 people which includes 475 below market rate homes for faculty and staff and housing for roughly 3000 students.  Apartments for 600 students will be available for occupancy by the fall of 2011.

Affordable Workforce Housing

One of the big issues in this area is the availability of affordable housing for UC Davis’ workforce.  Unlike most of the other UC’s, UC Davis does not have an extensive faculty and staff housing program.  One has to go back to the relatively small Aggie Village to find another project of this sort. 

The 475 below market rate homes will utilize various equity models that will allow for full equity for the home owners while at the same time, the university will retain a measure of control.  Nolan Zail, senior vice president of development for Carmel Partners, while short on specifics, told the Vanguard yesterday, that they believe the homes will sell for less than market rate however, he could not get into specifics about how the mechanism worked. 

In the press release from the UC Davis News Service, they write:

“West Village plans to sell homes at a starting price of about $400,000, below the market for comparable homes in Davis. The homes will be used as a major tool for recruiting and retaining top faculty and staff. Already, more than 1,500 people have expressed interest.

Homes will be allocated by lottery to four pools of employees, with 50 percent for recently recruited faculty and staff members and an additional 20 percent for employees with the lowest incomes.”

There will also be a substantial buffer from Russell.  According to Nolan Zail, that buffer is around 150 feet along Russell.  The project will be nestled into the northeast corner of the fields to the west of campus.

When asked if the issue of Russell Blvd access would be revisited, no one had a direct answer.  However, it was pointed out that the issue of access was a heated issue for neighbors and the result of a long negotiated process.  Nevertheless, as someone who lives in that area and utilizes that road network, it makes little sense to have a neighborhood that is cut off from the rest of the community and the new store in West Davis would be helped greatly by access to the rest of West Davis near Lake.

One of the other features of the project will be the Davis Center of the Sacramento City College in the Los Rios Community College District.  This will be the first of its kind on a UC Campus.

Energy Efficiency and Alternative Energy Use

One of the big issues in Davis is the issue of energy efficiency and GHG reduction.  The university is advertising this as a “Zero Net Energy” community.  They appear long on rhetoric, but lacking a lot of detail when pressed.

The project has received a $2 million grant from the California Energy Commission.

According to the release:

The planners for West Village, now under construction just west of the Davis campus, are now analyzing how to combine energy-saving measures with a sophisticated “smart grid” or network for generating, storing and distributing energy. The goal of the project is to create a great place to live and a “zero net energy” community with aggressive energy efficiency measures and on-site renewable resources to meet the community’s annual energy demand.

“We are thrilled to be supporting this project with a university so committed to teaching, research and public service,” Karen Douglas, chairman of the energy commission, said at a news conference on campus today (Aug. 10). “West Village promises to lead us toward a new state of the art for community-based energy strategy.”

Douglas said the energy commission is dedicated to improving the quality of life for Californians through energy research, development and demonstration projects. The $1,994,322 grant, made through the commission’s Public Interest Energy Research Program, will help the university to analyze and design energy technologies and the smart grid that will integrate them.

The Vanguard spoke to UC Davis Director of Environmental Planning Sid England and Jim Davis, president of Chevron Energy Solutions who is leading up the energy team along with the local consulting firm Davis Energy Group.

The Vanguard learned that the project is expected to exceed 30% improvement over Title 24 requirements in terms energy efficiency standards.  The rest of the project’s reduction of energy usage will be done through photovoltaics that will be on-site but off-building.  The plan is to use them on top of parking areas and also along greenbelts according to Sid England.

There will also be the use of passive building design in terms of orientation, taking advantage of sun patterns and also wind patterns to reduce energy use.

According to the release:

“Planners estimate the baseline energy use for the first phase would be about 16,500 megawatt hours, including 11,100 for gas and 5,400 for electric. The new energy commission grant will fund analysis and design to minimize energy use by facilities and to offset demand with renewable power generated on site. One of the renewable energy technologies that will be evaluated is the biodigester developed at UC Davis.”

Neither Mr. England, Mr. Davis, or the developer Nolan Zail could provide The Vanguard more detail than this about the energy efficiency features or how zero-net energy will be obtained.  This was not for a lack of effort on the Vanguard’s part either.

During the conversation with Sid England, it was asked about the Davis’ project’s 50% improvement over Title 24, Mr. England got defensive and said he was not aware of that and more importantly that they had affordability requirements and had to balance the environmental features with the need to bring the units at below market prices.

The Vanguard overall was disappointed that we did not get more specific in terms of the energy reductions/ energy efficiency features or the financing.  The university is obviously not in a position where it really needs to sell the development at this stage, they are simply going to build the project.  There was some speculation that given the economy and market, this project would be put on hold.  However, that is not the case.  The infrastructure has already gone in, in terms of water and electrical lines and ground is being broken now.

This project is long overdue in terms of the need for affordable workforce housing for UC Davis faculty and staff. It also begins to address the need for student housing on campus.  Studies have consistently shown that UC Davis has the lowest percentage of on campus housing among the UC’s.  It has also lagged in terms of providing faculty with affordable workforce housing in a market that can price most faculty right out of town.
Overall this provides the campus and community with much needed student and workforce housing.  As discussions on this site have shown, we are in need of that and these units are coming on line starting in 2011.

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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171 thoughts on “UC Davis’ West Village Seeks To Break Ground”

  1. PRED Old Timer

    I was one of the 1500 that expressed interest. Both my husband and I work for UCD and there is no way we could have afforded one of these units. I’ve written to even and even called the contacts for West Village to experess my concerns over how this project so amazingly fails to meet the needs of staff. The reply over and over was that this project wasn’t for us, their focus was on faculty. Thanks so much UCD for your incredible leadership on green social issues…. not!

    The one good piece of news is more student housing. I can’t wait to hear the howls of outrage from of Davis landlords when vacancy rates climb up.

  2. Citizen Q

    I don’t think it’s as much as you think. It’s only 475 houses. People talk about 1500 units, but most of those are student housing units. What we’re really talking about is about 800 housing units if WHR goes through. That should meet some of the demands for workforce housing and forestall the bigger and more problematic projects of Cannery and CV off for another ten years at least. I’d be happy with these projects if we stop approving units after this. And don’t forget we’re pretty much out of major realistic infill, so that may happen.

  3. Matt Williams

    [quote]PRED Old Timer said . . .

    I was one of the 1500 that expressed interest. Both my husband and I work for UCD and there is no way we could have afforded one of these units. I’ve written to and even called the contacts for West Village to experess my concerns over how this project so amazingly fails to meet the needs of staff. The reply over and over was that this project wasn’t for us, their focus was on faculty.[/quote]
    Thank you for your candid post. What you are saying does not surprise me, and is precisely why I am on the fence regarding the WHR project. If Parlin can figure out a way to create units that are attainable for UCD workers like you and your husband then I beleve WHR will contribute to the “greater good” of the Davis community.

    As long as I’m not being too personal, I’d like to ask a few follow-up questions. Your answers may help all Davisites better understand what the term “Workforce Housing” for current UCD employees means. So here is the first two questions,

    1) Based on what you have read about WHR, what reservations do you have about potentially living in one of the townhomes at WHR?

    2) Do you know other UCD workers who are in a similar situation as you and your husband are?

  4. earoberts

    The WHR townhomes are $425,000, according to the developer himself. How is that affordable? We need more specifics on this issue. Are there townhomes for $400,000 or less, and if so, how many and for how much?

  5. Rich Rifkin

    [quote]Both my husband and I work for UCD and there is no way we could have afforded one of these units.[/quote]How much can you afford? If you cannot afford these units on two UC Davis salaries, how much are they telling you a family needs to make to live at West Village. My understanding was that the prices will be around $400,000, which is on the low-end for a house in Davis.

  6. Sue Greenwald

    According to city staff, we have somewhere between 500 and 600 units approved/zoned for and unbuilt in the city today. Add that to the University’s 475, and you get about 1000. 3000 student beds translate into 1000 dwelling unit equivalents using our very out-of-date assumption of 3 persons per dwelling unit. There are significantly more student units if you use the 2.5 people per unit consistent with the latest census.

    The figure of 2000 already approved but unbuilt units between the city and West Village is a conservative number, and it would be a huge number even in hot market. It is a ridiculous number in a market predicted to be slow for years to come.

    I was just talking to a University administrator a few days ago, and he said that, due to demographic trends, the University is going to have a tough time finding enough qualified students to fill their incoming classes. I was surprised to hear that. If he is right, it appears that the University is more likely to be in shrinking, rather than growing, phase for at least the next decade.

  7. Matt Williams

    [quote]Huh? said . . .

    The WHR townhomes are $425,000, according to the developer himself. How is that affordable? We need more specifics on this issue. Are there townhomes for $400,000 or less, and if so, how many and for how much?[/quote]
    1) I believe the $425,000 number you are quoting is from the Staff Report not from the developer. Is that right?

    2) If that is where you got that number, please note that $425,000 is the average. There will be units below that average and above that average.

  8. Sue Greenwald

    I should add that I am very happy that the student units are being built. It should take pressure of rents, and make Davis one of the most affordable of the UC campuses for students.

  9. Citizen Q

    “According to city staff, we have somewhere between 500 and 600 units approved/zoned for and unbuilt in the city today. “

    Who cares, according to city staff. Add up the recently approved projects and tell us where you are getting the numbers from, because my numbers from Chiles, Verona, Grande, do not come anywhere close to 500 or 600 units. Where are you getting the numbers from and don’t act like you go by staff and don’t do the math.

  10. Sue Greenwald

    Simply, there are other units approved and unbuilt. Why are you only looking at Chiles, Verona and Grande?

    I find it amazing that folks are going to such lengths to justify the approval of yet another peripheral subdivision when we have so many units in the pipeline, when we have exceeded our SACOG requirements, when housing is down about 22% from peak and economists predict significantly further decreases on housing in the Davis price range, and when we are likely to get a large influx of resale housing on the market when people give up on the investment rental houses they have bought in the last decade which are loosing money every month and appreciation is no longer likely.

    What ever happened to the concept of slow growth and maintaining our small town character that most citizens, including most students, enjoys so much?

  11. Observer

    Sue said, “What ever happened to the concept of slow growth and maintaining our small town character that most citizens, including most students, enjoys so much?”
    She’s right! What is the population of Davis now? I’ve 60,000-66,000. How many more people do we need for this town to become pleasant? We already have infrastructure problems with water, sewage, parking, etc. How is adding yet more people going to make life more enjoyable for anyone? At some point, it is time to say “enough.”

  12. Matt Williams

    Page 19 of the final Housing Element Steering Committee Report gives us some insight into Sue’s numbers.

    Primary Sites — Sites Currently Planned and Zoned for Housing. There is currently a potential for approximately 516 – 569 housing units on sites already zoned for residential use. These do not require a General Plan amendment or rezoning but may require a final planned development and / or design review approval. Below is a list of sites with existing zoning (as of January 1, 2008).

    Building permits in 2006 and 2007 ……………………………148 units
    Parque Santiago Ensenada Drive
    remaining units ……………………………………………. 3 units
    Willowbank 10……………………………………………….31 units
    233 and 239 J Street………………………………………… 4 units
    2990 Fifth Street……………………………………………28 units
    4100 Hackberry affordable site………………………………..13 units
    404 E. Eighth Streeet (net increase)………………………….. 3 units
    Willow Creek Commons…………………………………………21 units
    Cal Aggie House……………………………………………..11 units
    Ministerial second units, estimate based
    on historic data…………………………………………….18 units
    Discretionary second units, estimate based
    on historic data…………………………………………….24 units
    Downtown infill, estimate based
    on historic data…………………………………………….52 units
    Permitted in neighborhood shopping
    centers, estimate……………………………………….12 – 50 units
    1207 and 1233 Olive Drive ……………………………………49 units
    R-2 zone units, estimate based
    on historic data………………………………………..10 – 25 units
    R-3 zone units, estimate based
    on historic data…………………………………………….24 units
    Vacant single family lots as of July 1, 2007
    not in sites above…………………………………………..65 units
    Total ……………………………………………… 518 – 571 units

    Of that list the following 216 units are no longer available.

    Building permits in 2006 and 2007 ……………………………148 units
    Parque Santiago Ensenada Drive,
    remaining units ……………………………………………. 3 units
    Willowbank 10………………………………………………..1 unit
    233 and 239 J Street………………………………………… 4 units
    2990 Fifth Street……………………………………………28 units
    Willow Creek Commons…………………………………………21 units
    Cal Aggie House……………………………………………..11 units

    That gives a net site count of 302-355. Then add the following 309 units that have been approved since the HESC report came out

    New Harmony ………………………………………………..77 units
    Grande …………………………………………………….41 units
    Verona …………………………………………………….83 units
    Chiles Ranch ………………………………………………108 units

    Then to lend a semblance of reality, the following 140-193 units should be temporarilly removed from the list due to the realities of the current economy.

    Ministerial second units, estimate based
    on historic data…………………………………………….18 units
    Discretionary second units, estimate based
    on historic data…………………………………………….24 units
    Downtown infill, estimate based
    on historic data…………………………………………….52 units
    Permitted in neighborhood shopping
    centers, estimate……………………………………….12 – 50 units
    R-2 zone units, estimate based
    on historic data………………………………………..10 – 25 units
    R-3 zone units, estimate based
    on historic data…………………………………………….24 units

    That leaves us with 471 units, 394 if you exclude the New Harmony affordable apartments.

  13. Curious

    “How is adding yet more people going to make life more enjoyable for anyone? At some point, it is time to say “enough.” “

    So you have no problem with people driving here from Woodland, Dixon, or West Sacramento to work at UC Davis?

  14. Adam Smith

    Why are people concerned about the number of approved but unbuilt units? Is the primary concern the amount of equity of current Davis homeowners? Developers will not build new housing unless they can make an acceptable profit. Once demand returns and the units can be built and sold at acceptable levels, then the units will come online. But that will be in a better market for housing values, and housing values will be on the rise again.

  15. wdf

    “I was just talking to a University administrator a few days ago, and he said that, due to demographic trends, the University is going to have a tough time finding enough qualified students to fill their incoming classes. I was surprised to hear that. If he is right, it appears that the University is more likely to be in shrinking, rather than growing, phase for at least the next decade.”

    If you look at this birthrate chart for the US —

    [url]http://en.wikipedia.org/wiki/File:Birthratechart_stretch.PNG[/url]

    then that conclusion makes sense. If the UC system is sensitive to those demographics for those born in 1990-1991 for their incoming class, then you see that birthrate is on a downward trend for several years. I think this is what public schools in many places have been dealing with.

  16. Sue Greenwald

    Curious 12:04 — There is absolutely no evidence that building more Davis houses results in less commuting miles, unless you are talking about housing that is restricted to local employees, and currently that is only the University housing.

    Many people move to Davis for the schools and lifestyle, and then commute to Sacramento or even the bay area. I have never seen research as to how many people who work elsewhere and commute out buy the houses in our new peripheral subdivisions, and how far they commute.

    Until that study is done, we have no idea whether we increase or decrease commuting by building new peripheral subdivisions.

  17. Through the looking glass ...

    Can anyone comment on what “zero net energy” means?

    My interpretation is that it translates into 100% on-site GHG reduction.

  18. Matt Williams

    Adam, the problem with your approach is that over the past 10+ years developers in Davis have effectively made stepchildren of people like PRED Old Timer and her husband. Bottom-line, the price per unit of the units built in that period have been consistently outside the attainable price range. There are lots of reasons for that. One is beyond the developers’ control . . . the quality of life in Davis is very high relative to all California communities, and therefore living in Davis commands a premium when compared to other California communities. The second is very much in the developers’ control . . . the size of the units built. The bigger the house or townhome, the higher the price.

    So, if we are going to address the workforce housing need of Davis workers like PRED Old Timer, we need to make a focused effort. Of the units in the HESC list I posted earlier, how many of them have a unit price under $400,000?

  19. David M. Greenwald

    Through the looking glass: I spent about two hours yesterday trying to get at that very point and could never get anyone with enough working knowledge of the specifics to get an answer to that.

  20. Through the looking glass ...

    David: I’m not sure what you mean by “enough working knowledge of the specifics.” That seems to speak more to execution. Surely Sid, Jim, and/or Nolan can articulate their overall GHG reduction goal.

  21. Matt Williams

    [quote]Sue Greenwald said . . .

    Curious 12:04 — There is absolutely no evidence that building more Davis houses results in less commuting miles, unless you are talking about housing that is restricted to local employees, and currently that is only the University housing.

    Many people move to Davis for the schools and lifestyle, and then commute to Sacramento or even the bay area. I have never seen research as to how many people who work elsewhere and commute out buy the houses in our new peripheral subdivisions, and how far they commute.

    Until that study is done, we have no idea whether we increase or decrease commuting by building new peripheral subdivisions.[/quote]
    Sue, a study of Davis’ historical trend is going to produce an already known result. The proportion of Davis residents commuting out of Davis has increased substantially over that period. That trend and the effective abandonment of the Davis workforce are situations we need to address. My first exposure to your feelings on these two trends came when the Council was reviewing the Willowbank 10 proposed development. You argued strongly for smaller units, which would have been more affordable. That really impressed me at the time, and I appreciate it even more now than I did then.

  22. Don Shor

    Curious: “Correct me if I’m wrong, Sue, but I thought West Village was exclusively for UC Davis employees?”

    It is. From the FAQ’s at [url]http://westvillage.ucdavis.edu/[/url]

    “Who will be able to purchase a home in the West Village?

    Ownership is intended for full-time employees on the Davis or Sacramento campuses. There are four eligible pools of prospective buyers:

    o Aggie Pool – Ladder-rank faculty members who have been recently recruited and staff members who have been recently recruited through national searches. This pool includes employees who own homes in Aggie Village, a 37-home project built in 1997. Aggie Pool allocation at West Village: 156 to 172 (50 percent of the total).
    o Mustang Pool – All other faculty and staff. Allocation: 87 to 96 (28 percent).
    o Blue and Gold Pool – All faculty and staff with the lowest incomes. Allocation: 69 to 75 (22 percent).
    o University employees who already own homes within the Davis Joint Unified School District – This pool has no allocation of homes. The university would select from this pool only if there are any homes left after people in the first three pools are given chances to buy.

    How will the campus decide who gets to buy a home?

    A lottery system will be used to allocate houses within each of the four pools. The lottery list will become the waiting list for each pool.”

  23. Don Shor

    Sue: “I was just talking to a University administrator a few days ago, and he said that, due to demographic trends, the University is going to have a tough time finding enough qualified students to fill their incoming classes. I was surprised to hear that. If he is right, it appears that the University is more likely to be in shrinking, rather than growing, phase for at least the next decade.”

    That is not what the university is planning for.

    According to the university’s long range projections, updated in 2008, total enrollment at UC is expected to rise 1.1% from 2010 through 2020. “UC will take advantage of slower growth among high school graduates to offer opportunity to a broader group of California students.”
    UC Davis is expected to increase total enrollment from 32,310 in 2010 (all schools) to 36,780 in 2020. 2300 of those will be at the undergraduate level.
    [url]http://www.ucop.edu/planning/lrenroll.html[/url]

  24. Don Shor

    So the student housing provided by UC at West Village will not even accommodate the expected increase in undergraduate enrollment over the next decade after it opens. In sum:
    West Village provides housing for recruited faculty and recruited staff from out of town.
    It barely increases the housing stock in town, except for whatever is vacated by faculty and staff who are able to move in to West Village via lottery for 150 – 175 houses (for which they will also compete with faculty and staff from out of town).
    It doesn’t provide affordable housing for employees who already live here.
    It isn’t likely to reduce the low rental vacancy rate in town, as UC growth will more than exhaust the student housing provided in this project.
    Like all other projects I am aware of, it does nothing for the most underserved housing segment of Davis: renters.

  25. David M. Greenwald

    Don: I appreciate your analysis, I’m of like mind. You may recall back in December I was pushing for a large on-campus student housing project. What are your thoughts on that?

  26. Matt Williams

    Don, I would amend your last line to read:

    Like all other projects I am aware of, it does nothing for the two most underserved housing segments of Davis: rental housing and Workforce housing.

    Will you accept that friendly amendment?

  27. To Matt

    Am I reading your amendment correctly. Have you now reached the conclusion that neither WHR nor WV provide workforce housing?

    FWIW I think this is a generic Davis problem that has nothing to do with individual projects. The price per square foot for housing in Davis falls within a range that prices families that I would classify as “workforce” out of the market. I have hired a fair number of younger people in this demographic, and they invariably buy in Natomas, Elk Grove, Woodland, etc. if they want to own a home.

    Is there a general consensus on what the maximum price is for workforce housing?

  28. Observer

    I said
    “How is adding yet more people going to make life more enjoyable for anyone? At some point, it is time to say “enough.” ”

    Curious said
    “So you have no problem with people driving here from Woodland, Dixon, or West Sacramento to work at UC Davis?”

    No, Curious, I have no problem with that. I work in Sacramento, my spouse works in Fairfield, and my daughter works in Davis. Who cares? Is there a law that says you have to live in the town where you work? People should live where they choose and where they can afford the kind of housing they want. I think it’s called free choice.

  29. Expectations

    Is it possible that workforce housing expectations are too high? It seems that people expect a starter home to be new and 1,500+SF. Forgive me (I’m starting to sound like my forefathers), but my first home was 30 years old and 1,050SF. Davis has 33 homes available priced at $350,000 or less (according to http://www.metrolistmls.com/).

  30. Matt Williams

    [quote]To Matt said . . .

    Am I reading your amendment correctly. Have you now reached the conclusion that neither WHR nor WV provide workforce housing? [/quote]
    No. Don’s comment was restricted to WV. IMHO, the jury is still out on WHR since the only numbers we have seen to date are from sources other than Parlin.

    BTW, you knew the answer to that question before you asked it. 8>)

  31. Matt Williams

    [quote]To Matt said . . .

    FWIW I think this is a generic Davis problem that has nothing to do with individual projects. The price per square foot for housing in Davis falls within a range that prices families that I would classify as “workforce” out of the market. I have hired a fair number of younger people in this demographic, and they invariably buy in Natomas, Elk Grove, Woodland, etc. if they want to own a home.

    Is there a general consensus on what the maximum price is for workforce housing?
    [/quote]
    No, I don’t think that consensus exists in Davis. Further, I would say that there are multiple strata within the Workforce housing cohort.

  32. Matt Williams

    [quote]Expectations said . . .

    Is it possible that workforce housing expectations are too high? It seems that people expect a starter home to be new and 1,500+SF. Forgive me (I’m starting to sound like my forefathers), but my first home was 30 years old and 1,050SF.[/quote]
    My wife and I lived in a very nice 2 bedroom 1,248SF in Tennessee before we moved to Davis. I would recommend that floorplan [url]http://www.alarafarms.com/fp_meadowlands.htm[/url] in a heartbeat. Their one bedroom 943SF unit [url]http://www.alarafarms.com/fp_saratoga.htm[/url] was very nice as well.

  33. SODAite

    Need clarification. When the developer tells the staff, planning commission, CC, etc the ‘sales price’ that is somewhat used to decide affordability, are they held to that? What if they don’t build for awhile like now and the market changes?

  34. To Matt

    No. I thought you had seen the light. Don said “Like all other projects I am aware of” and he is certainly aware of WHR.

    WHR has disclosed the square footages of their units, and people with expertise in the Davis housing market can make a very good estimate on the likely price of the units. Since Parlin doesn’t have a magic wand that will change the market forces in Davis, waiting on them to release official numbers is unneccessary.

  35. Matt Williams

    Going back and rereading Don’s quote I can see the validity of your interpretation. My bad.

    With townhomes reselling in the $250-$275 per SF range (they go as low as $223 and as high as $291) Then a 1,400 SF townhome @ $250 would price at $350,000, while a 1,600 SF townhome @ $275 would price at $440,000. If Parlin can get their 2BR townhomes down to 1,250 – 1,300 SF (like the floorplan I posted earlier) then they would price in the $312,500 to $357,500 range. Given the 90% reduction of the monthly utilities bills for the buyers, a purchase price in that range may even be attainable.

    Thoughts?

  36. To Expectations

    [quote]Is it possible that workforce housing expectations are too high? It seems that people expect a starter home to be new and 1,500+SF.[/quote]If a bunch of new 1,000 SF houses came on the market, they would sell very quickly to the Davis workforce.

  37. Matt Williams

    [quote]To Expectations said . . .

    If a bunch of new 1,000 SF houses came on the market, they would sell very quickly to the Davis workforce.[/quote]
    I wonder how the WENA neighbors would feel about having lots of emptynester neighbors with virtually no children?

  38. Rich Rifkin

    [quote]I wonder how the WENA neighbors would feel about having lots of emptynester neighbors with virtually no children?[/quote]It was suggested to me — after I wrote my column on WHR — that the true, but unspoken, fear of the WENA neighbors is the low-income housing (38 apartments). The guy who told me that said, “No one will say that. It’s too politically incorrect. They fear criminals from those apartments will victimize them.” Does anyone here think that is the case? It never occurred to me. However, the person who told me this also added that crime from Moore Village has spilled over to other homes in Wildhorse, and that is the source of the fears for what is to come at WHR.

  39. Anonymous

    In March there was a city meeting over at Harper where the project was presented to the public for the very first time, I just happened to go out of curiosity. Greg Sokolov who Dunning quoted last week got up there and make that very case. He expressed fear of that and the developers response was that’s why we put the units up front where they have to sell the project and houses by looking presentable.

  40. To Matt

    [quote]If Parlin can get their 2BR townhomes down to 1,250 – 1,300 SF[/quote]I agree with your numbers, but …

    You don’t seriously think that Parlin is going to adjust their floor plan sizes to make a political accommodation, do you? Is that why you’re holding out on this issue?

    Even in the unlikely event it were possible to strike such an agreement, by the time they actually build, housing price recovery and rising interest rates will destroy the economic model.

  41. Matt Williams

    If your final sentence is true, then there is absolutely no chance that Davis will ever have a single unit of Workforce Housing. I’m too much of an idealist to accept that as true. I may be a modern day Don Quixote, but I plan to go down fighting for Davis’ workforce.

  42. Sue Greenwald

    Don,

    Given the demographic trends and the state’s fiscal situation, I would be surprised if the University expands its enrollment during the next decade. During the 20 years I have lived here, the University has always been predicting much larger enrollment increases than have materialized.

    I would predict that broadening of enrollment, if it occurs, will occur primarily at the CSU and community college level. This is not a desire of mine, it is just a prediction.

  43. To Matt

    Not true. To get real workforce housing in Davis, all we need is for developers to build plenty of units in the 800 – 1,200 SF range.

    Just because a developer slaps the workforce housing label on their product doesn’t make it workforce housing – that’s just marketing.

    This is not to ignore or discount the many problems associated with building at this price point, but that’s the answer to the problem. WHR is just a distraction.

  44. Sue Greenwald

    To Curious 12:52 — Of course West Village is restricted to people who work locally, and it is reasonable to assume that its construction will decrease commuting miles. The same cannot be said for the other projects which have been approved or are on the table. I just wanted to point out that reduction of commuting hours is a reasonable assumption only when it comes to restricted workforce housing such as West Village.

  45. typhoid mary

    So when the real estate market was hot Sue Greenwald argued that we couldn’t build supply to overcome demand. Now she is arguing exactly the opposite. So when should we build then if we shouldn’t build when the market is hot or when it is cold?

  46. Homeless in Woodland

    1)Since these houses are to be built on ground owned by UCD , and I assume at least in part funded by UCD, would this project have to be a prevailing wage project? If not, why?

    2)If I unloaded all my recyclables out of my shopping cart, scraped together ALL my beer cans and came up with enough money to purchase one of these homes, and if UCD refused to sell one to me because I didn’t work for the university, could I sue for discrimination?

    Can you imagine the public uproar that would happen if some builder in Davis said they would only sell houses to affluent whites? From my point of view there appears to be a GROWING number of elitist racists in dear old Davis. Are there other housing subdivisions in Davis that have the same type of ownership requirements??? If there are ,why?

  47. To Matt

    Another point occurred to me about workforce housing as it pertains specifically to this thread about West Village.

    UC Davis is [u]not[/u] marketing its project as “workforce housing.” That is implied by the section heading in the article above, but it is misleading to conflate WV and WHR as two “workforce housing” projects.

    While they both will have for-sale units averaging around $400,000, the UC Davis housing will be at 50% below market and targeted mainly to faculty and senior staff recruits.

  48. Through the looking glass ...

    From the Davis Enterprise (8/11/2009):[quote]Officials said they believed the housing area will be the first zero net energy community in the county.[/quote]The project has been validated by a $2,000,000 grant from the California Energy Commission; and the energy team includes Chevron Energy Solutions, Davis Energy Group, PG&E, the UCD Water Efficiency Center, the UCD Western Cooling Efficiency Center, the UCD Lighting Technology Center, and five other research centers on campus.

    At this point, I have to conclude that West Village will achieve 100% on-site GHG reduction.

  49. Matt Williams

    [quote]
    To Matt said . . .

    Another point occurred to me about workforce housing as it pertains specifically to this thread about West Village.

    UC Davis is not marketing its project as “workforce housing.” That is implied by the section heading in the article above, but it is misleading to conflate WV and WHR as two “workforce housing” projects.

    While they both will have for-sale units averaging around $400,000, the UC Davis housing will be at 50% below market and targeted mainly to faculty and senior staff recruits.[/quote]
    You are absolutely right. I see the WV Faculty and senior staff initiative as housing targeted at the Davis Workforce, but only at a specific cohort within that workforce. PRED Old Timer gave us a clear example of how that cohorting works in real life.

  50. To Matt

    To define the WV housing as “workforce” – with the qualifier that it serves only a subset of the workforce – is silly. By that logic, we can also put the “workforce housing” label on a development of $2M executive estates. Executives are technically no less “workforce” than faculty or senior nationally-recruited staff.

    Call it what it is — subsidized below-market-rate faculty/staff housing.

  51. Workforce Housing

    No need to reinvent the wheel. From Wikipedia:[quote]Workforce housing is defined by four principal factors:

    Affordability
    Based on criteria set by mortgage lenders, the U.S. Department of Housing and Urban Development (HUD) concludes that no more than 30% of household income should be allocated to housing Principal, Interest, Taxes and Insurance (PITI). Typically, pricing calculations that define workforce housing use 30% of household income as the maximum threshold of affordability.

    Home ownership
    Most appropriately, workforce housing connotes single-family detached homes for sale at prices that workforce families can afford. Obviously, workforce families often seek alternative housing opportunities in rental apartments and rental homes, town homes, condominiums, co-ops and shared housing, including subsidized housing. The most appropriate and socially valuable definition of workforce housing connotes fee-simple ownership of single-family homes with yards, one of the least efficient but perhaps the most personally satisfying land use forms.

    Critical workforce
    Most appropriately, “workforce housing” connotes housing intended to appeal gainfully employed, essential workers in the community, i.e. police officers, firemen, teachers, nurses and medical technicians, office workers, etc. Workforce families are generally younger and often include or plan to include children. Workforce housing, then, implies a subjective change in awareness of a widespread social condition that has been referred to generally by terms such as affordable housing.

    Proximity
    Most appropriately, “workforce housing” is located in or near employment centers (as opposed to distant suburbs) and is sometimes cited as one antidote to urban sprawl, with its accompanying traffic congestion, lengthy commutes, convenience stores and strip retail centers.
    Ideally, workforce housing aims at satisfying the housing needs of family households earning 50% to 150% of median household income in a given SMSA (Standard Metropolitan Statistical Area). [u]Ideally, workforce housing aims at providing for-ownership single-family homes priced and financed in 30-year fixed-rate monthly terms equal to approximately 15% to 45% of median household income within a given SMSA.[/u][/quote]Either it is , or it ain’t.

    If you don’t agree with the definition, then propose a change. But if we’re going to have an intellectually honest discussion of workforce housing in Davis, we need objective metrics as a starting point.

  52. Matt Williams

    I agree with the conceptual definition put forward by Wikipedia. Where I differ from it, both in principle and with respect to the practical realities of the Davis housing market is “The most appropriate and socially valuable definition of workforce housing connotes fee-simple ownership of single-family homes with yards . . . “ My difference is very much in line with the words they use to finish that sentence . . . one of the least efficient but perhaps the most personally satisfying land use forms.” Personal satisfaction 1) is a very subjective term, and 2) has costs associated with it that vary from specific situation to specific situation.

    Single-family homes with yards have maintenance costs, in time, in personal body wear and tear, and in expenses. Lets look at the expenses in terms specific to Davis. The use of water for irrigation of yard plants on average more than triples the resident’s bimonthly water bill. It can also triple the bimonthly sewer bill if the resident doesn’t shut off their irrigation from November through February. What does the typical resident with a yard spend on Mow Blow and Go? Need I go on? If a couple has no children what is the incremental value of having a yard?

    How much time do you spend personally maintaining your yard? Do you enjoy that time? What about your friends and neighbors?

    When was the last time you said to yourself, “Every year this yard feels like it gets larger and larger.”?

    So I would change the second section to read:

    Home ownership

    Most appropriately, workforce housing connotes single-family homes for sale at prices that workforce families can afford. Workforce families often seek housing opportunities in single-family detached homes with yards, town homes, condominiums, co-ops and shared housing, including subsidized housing, as well as rental apartments and rental homes. Personal family finances and lifestyle choices will determine which of these options individual members of the workforce pursue.

  53. Matt Williams

    [quote]To Matt . . .

    To define the WV housing as “workforce” – with the qualifier that it serves only a subset of the workforce – is silly. By that logic, we can also put the “workforce housing” label on a development of $2M executive estates. Executives are technically no less “workforce” than faculty or senior nationally-recruited staff.

    Call it what it is — subsidized below-market-rate faculty/staff housing.
    [/quote]
    Are faculty/staff not part of the workforce?

    Executives are not part of the workforce cohort they are part of the executive cohort.

    With that said there may well be some of the selected staff UCD is expecting to serve who are more appropriately categorized as non-workforce.

  54. My View

    “Single-family homes with yards have maintenance costs, in time, in personal body wear and tear, and in expenses. Lets look at the expenses in terms specific to Davis. The use of water for irrigation of yard plants on average more than triples the resident’s bimonthly water bill. It can also triple the bimonthly sewer bill if the resident doesn’t shut off their irrigation from November through February. What does the typical resident with a yard spend on Mow Blow and Go? Need I go on? If a couple has no children what is the incremental value of having a yard?”

    I would leave Wikipedia’s def’n just the way it is. I think if reflects the majority view that too much densification is not preferable. It may be a distasteful necessity, but not the optimum. Most families w children want a yard for their kids to play in. Even a lot of older couples enjoy their yard and some semblance of space between neighbors. There will be a few senior citizens who may want to downsize to a no yard townhome, but they are the exception, not the rule.

    I believe Wikipedia’s def’n is right on the money (pardon the pun). I was particularly interested in the part about the mortgage payments should be no more than 30% of income. With the lessons of the mortgage meltdown, I think Wikipedia’s point is good advice, that should be adhered to for everyone’s sake.

    Let’s face it. From what I have seen thus far, WHR does not provide “affordable workforce housing” based on the very sensible def’n provided by Wikipedia.

  55. To Matt

    [quote]Are faculty/staff not part of the workforce?[/quote]Only if they fall within the defined metric:[quote]households earning 50% to 150% of median household income in a given SMSA (Standard Metropolitan Statistical Area)[/quote]

  56. To My View

    [quote]Let’s face it. From what I have seen thus far, WHR does not provide “affordable workforce housing” based on the very sensible def’n provided by Wikipedia.[/quote]The bottom line is –

    WV is not workforce housing, and doesn’t pretend to be.
    WHR is not workforce housing, and does pretend to be.

  57. To Rich Rifkin journalist

    “It was suggested to me — after I wrote my column on WHR — that the true, but unspoken, fear of the WENA neighbors is the low-income housing (38 apartments). The guy who told me that said, “No one will say that. It’s too politically incorrect. They fear criminals from those apartments will victimize them.” Does anyone here think that is the case? It never occurred to me. However, the person who told me this also added that crime from Moore Village has spilled over to other homes in Wildhorse, and that is the source of the fears for what is to come at WHR.”

    Rich I don’t know whom you spoke with, but please don’t try to characterize the words of one individual as the consensus opinion of Wildhorse neighbors’ opposition to the project, that would be frankly dishonest and irresponsible in your role as a “journalist”; the majority of people I have spoken to in Wildhorse and OTHER neighborhoods have legitimate concerns of the necessity for more development in the face of tough economic times, sluggish housing on the current market, and the aforementioned 2000 homes already approved to be built (including West Village); don’t try to portray opponents to this project as fear-mongering individuals, it will only hurt your reputation!

  58. Rich Rifkin

    [quote]Rich I don’t know whom you spoke with, but please don’t try to characterize the words of one individual as the consensus opinion of Wildhorse neighbors’ opposition to the project, that would be frankly dishonest and irresponsible in your role as a “journalist”;[/quote]I never said this was the view of the neighbors. I said it was the view of one person (who happens to be very well known and well-connected in Davis). Let me quote myself: “… the person who told me this …” I should add that my source for this comment DOES NOT live in Wildhorse or own property nearby. [quote] don’t try to portray opponents to this project as fear-mongering individuals, it will only hurt your reputation![/quote] I should further add that this concern about crime is not my view. I’ve listened (in public forums) to many of the neighbors and never once heard this view expressed. As such, I was surprised to hear that my source (who is a very credible person) thought that was the unspoken reason for opposition.

  59. To Rich

    [quote]I should add that my source for this comment DOES NOT live in Wildhorse or own property nearby.[/quote]How about a more complete conflict-of-interest disclosure?

    Does your source have any known or probable financial connections to Parlin Development (landlord, consultant, employee, prospective subcontractor, investor, service provider, etc.)? Is your source on record supporting the Parlin project in any way?

    Another thing troubles me about this exchange. To anonymously quote a source is the functional equivalent of “anonymous posting by proxy.” Since you are very much opposed to posting critical comments from behind a pseudonym, why would you serve as a proxy for the same conduct?

  60. David M. Greenwald

    “How about a more complete conflict-of-interest disclosure?”

    I’m sure you didn’t intend it this way, but your post insures the absurdity of it all. Perhaps we can start with, “are you now or have you ever” and then go down the logical path to where it ends. Or perhaps we can stop this nonsense and get the heart of the issues that face this community, quit worrying about who is speaking for whom and let what we say stand on its own or fall on its own.

  61. Matt Williams

    [quote]To Matt said . . .

    Are faculty/staff not part of the workforce?
    Only if they fall within the defined metric:
    Households earning 50% to 150% of median household income in a given SMSA (Standard Metropolitan Statistical Area)[/quote]
    Per the Davis General Plan Housing Element Update Needs Assessment Background Report produced by Bay Area Economics for the HESC the 2006 Unadjusted Median Household Income for the Sacramento-Yolo CMSA consists of El Dorado, Placer, Sacramento, and Yolo counties was $53,789. That makes the 50% and 150% values $26,895 and $80,684 respectively.

    I received in an e-mail last week the results of the inquiry in terms of whether the various UCs and their respective cities provide housing to either faculty or their respective staff members. Most of UCs do provide some sort of housing, but it appears that none of the cities do.

    As part of the study the typical Faculty salary range was provided. None of them exceeded the $80,684 threshold.

    University City Prof. Salaries
    Berkeley No No $49-64K
    Irvine Yes No $56-66K
    Los Angeles Yes No $46-60K
    Merced No No $48-62K
    Riverside No No $49-64K
    San Diego Yes No $49-64K
    San Franscisco Yes No $49-64K
    Santa Barbara Yes No $56-66K
    Santa Cruz Yes No $49-64K
    Stanford Yes No $72-77

  62. To Rich

    [quote]To anonymously quote a source is the functional equivalent of “anonymous posting by proxy.” [/quote]Sorry. Brain hiccup. I meant to say “To [u]post an anonymous quote[/u] is the function equivalent of “anonymous posting by proxy.”

  63. To Rich Rifkin journalist

    never said this was the view of the neighbors. I said it was the view of one person (who happens to be very well known and well-connected in Davis). Let me quote myself: “… the person who told me this …”

    Let me guess, Pam Nieberg?

  64. To David

    Rich Rifkin wrote:[quote]… the true, but unspoken, fear of the WENA neighbors is the low-income housing (38 apartments). The guy who told me that said, “No one will say that. It’s too politically incorrect. They fear criminals from those apartments will victimize them.”[/quote]This is an inflammatory comment from an anonymous source whom Rich has now described as a “very credible person” that is “very well known and well-connected in Davis.” He tries to whitewash the post by stating that it isn’t his opinion and the source “DOES NOT live in Wildhorse or own property nearby,” however, the damage is already done.

    It is perfectly reasonable under the circumstances to question the motivation of the anonymous well-known, well-connect, and very credible source that Rich chose to quote. The only way to get at this is to try and determine if the anonymous commenter was conflicted. Rich can certainly provide this information without “outing” his source (and should, given his militant stance on anonymous posting).

    Hence the request for a more complete disclosure.

    Another thing that troubles me now is why you would elect to jump into the thread and try to squelch the question?

  65. David M. Greenwald

    I don’t do that very often, but the tenor of your post was very concerning to me. I don’t always agree with Rich, in fact, I very often disagree with him, but I think he’s smart enough and has enough integrity to not take the word of someone with a clear agenda on a point. I would also suggest having been in his position before, there are times when you simply do not have the permission to share who it is. I think you’re going to have to judge whether you believe Rich or not based on whether you trust Rich. I don’t think you need to require him to give you more complete disclosure. And I really don’t think we need to vet everyone through a, “are you now or have you ever been” veil. I trust Rich to be discerning in the sources he chooses to utilize to make a point. You are free based on his track record to agree or disagree with that assessment. You are also free to present counter evidence. I don’t think discrediting the witnesses is a good way to maintain discourse.

  66. To Matt

    Thanks for the info!

    Your post establishes that new ladder rack faculty (in single income households) would qualify for workforce housing using the CMSA number as a benchmark. Have you done the calculation to determine how the $27K to $81K range translates into housing cost? Since this analysis involves PITI, it’s not a straight-forward calculation.

  67. Matt Williams

    Okay

    30% of $27,000 works out to $675 monthly
    30% of $81,000 works out to $2,025 monthly.

    Assuming annual property taxes of approximately $6,000 per year and $300 per year for homeowners insurance the monthly PITI payment for a 30 year fixed rate 6.5% $237,500 mortgage would be $2,026.16. Assuming a 20% downpayment that would translate to a purchase price of $296,875. If you factor in $100 a month saved due to the 90% utilities cost reduction that goes up to $316,250 and up further to $336,250 if the utilities savings is $200 per month.

    A 6.0% mortgage rate reduces the $2,026.16 to $1,948.93
    A 5.5% mortgage rate reduces the $2,026.16 to $1,873.49

    Does that help?

  68. Rich Rifkin

    [quote]Does your source have any known or probable financial connections to Parlin Development (landlord, consultant, employee, prospective subcontractor, investor, service provider, etc.)? Is your source on record supporting the Parlin project in any way? [/quote] No and no. [quote] Another thing troubles me about this exchange. To anonymously quote a source is the functional equivalent of “anonymous posting by proxy.” Since you are very much opposed to posting critical comments from behind a pseudonym, why would you serve as a proxy for the same conduct?[/quote] That point has some merit. However, my general problem with anonymous or pseudonymous posts is not the lack of a name for the poster. It is when they anonymous or pseudonymous poster attacks a member of our community by name.

  69. Rich Rifkin

    [quote]Let me guess, Pam Nieberg? [/quote]If you list off more names, I will ignore them. However, for the record this one time, it was not Pam Nieberg.

  70. To Matt

    Thanks Matt.

    You lost me at the 20% down payment. My bias is that 20% down puts the bar too high for most workforce families without equity. I’ll call a mortgage broker I know that services this demographic and ask for his opinion, as well as his projection of what the minimum down payment is likely to be after the sub-prime shake-out.

    On a preliminary basis, based on your numbers, I would endorse defining workforce housing as product in the range of approximately $100K to $300K.

    Thanks again for your help in clarifying the situation.

  71. Rich Rifkin

    [quote]It is perfectly reasonable under the circumstances to question the motivation of the anonymous well-known, well-connect, and very credible source that Rich chose to quote. The only way to get at this is to try and determine if the anonymous commenter was conflicted. [/quote] The source has no conflict of interest in this development.

  72. Matt Williams

    [quote]To Matt said . . .

    You lost me at the 20% down payment. My bias is that 20% down puts the bar too high for most workforce families without equity. I’ll call a mortgage broker I know that services this demographic and ask for his opinion, as well as his projection of what the minimum down payment is likely to be after the sub-prime shake-out.

    On a preliminary basis, based on your numbers, I would endorse defining workforce housing as product in the range of approximately $100K to $300K.

    Thanks again for your help in clarifying the situation.[/quote]
    20% down on a $296,875 home purchase is essentially $60,000. If we assume no children, isn’t it reasonable to assume the couple will be saving part of their salaries each paycheck? Couples with children is a wholely different ballgame. For the record I was a sole-custody single parent of my son from age 10 on, so I can appreciate the impact that parenting has on a budget.

    Also regarding the 20% down, don’t you expect that most first-time home buyers are going to get some help from their parents?

  73. To David

    A simple statement from Rich will suffice. I was clearly not suggesting that he disclose his source or provide any hints as to the source’s identity. While you may trust him to be discerning, he certainly made a very undiscerning post. Framing it as … I heard it from some guy, but that’s really not what I think … doesn’t cut it.

    Go back and read the original post. Rich tried to start a conversation about whether or not the neighbors were opposed to the WHR project because they were afraid of being ripped off by poor people from the affordable housing. He needs to respond.

  74. David M. Greenwald

    I understand and have read the entire context. I’ll let Rich fight his own battles. I have expressed to you my concern which transcends this specific issue. I hope you understand my concern, but right now I am not certain that you do.

  75. To Matt

    [quote]20% down on a $296,875 home purchase is essentially $60,000. If we assume no children, isn’t it reasonable to assume the couple will be saving part of their salaries each paycheck? Couples with children is a wholely different ballgame. For the record I was a sole-custody single parent of my son from age 10 on, so I can appreciate the impact that parenting has on a budget.

    Also regarding the 20% down, don’t you expect that most first-time home buyers are going to get some help from their parents?[/quote]

    The calculation of the price range for workforce housing is based on median household income and a crude estimate of what is affordable to people classified for the purposes of analysis as “workforce.” IMO, all issues like age, number of children, marital status, number of wage earners, access to equity and/or other sources of capital for a larger down payment, etc. should not enter into this equation (they are accounted for in the range).

  76. Don Shor

    Well, Matt, I think you have finally come up with a value for “affordable housing.” Given the 50 – 150% of median definition, and using the mortgate numbers you provided above, a house has to be priced at $100 – 300,000 to be “affordable.” If there is significant energy conservation, you can add maybe 10% to that. If it sells for more than $300K — $330K with significant energy-conservation features — it isn’t affordable housing.
    This conclusion is based on a cursory reading of all the figures on this thread, so feel free to modify….

  77. Matt Williams

    [quote]To Matt said . . .

    The calculation of the price range for workforce housing is based on median household income and a crude estimate of what is affordable to people classified for the purposes of analysis as “workforce.” IMO, all issues like age, number of children, marital status, number of wage earners, access to equity and/or other sources of capital for a larger down payment, etc. should not enter into this equation (they are accounted for in the range).[/quote]
    Agreed, and 20% down is pretty much a standard in conventional mortgage markets, both historically and currently. That clearly wasn’t the case in “the bubble” but I think we are back to reality now.

  78. Matt Williams

    [quote]Don Shor said . . .

    Well, Matt, I think you have finally come up with a value for “affordable housing.” Given the 50 – 150% of median definition, and using the mortgate numbers you provided above, a house has to be priced at $100 – 300,000 to be “affordable.” If there is significant energy conservation, you can add maybe 10% to that. If it sells for more than $300K — $330K with significant energy-conservation features — it isn’t affordable housing. [/quote]
    Sounds like a plan Don. However, what I was trying to get to was a deinition of “Workforce Housing” here in Davis at this time. If by chance a DJUSD teacher married to a UCD staff member have a combined income of $90,000, would you consider them as part of the Workforce Housing demographic cohort that has been systematically underserved by the 3,500 new housing units that have been built in Davis in the last 10 years?

  79. To Don

    The $100K to $300K range assumes a 20% down payment, which IMO is not a realistic or appropriate assumption for workforce housing.

    The current minimum for an FHA loan is 3.5%.

    If you use this number, the range will drop.

    Matt. Do you know what the number are with 3.5% down?

  80. Matt Williams

    $246,114 purchase price @ 6.5% interest.

    My estimate of $6,000 annual property taxes is probably high at that price. Anyone know what the current property tax rate is for Davis?

  81. To Matt

    [quote]Agreed, and 20% down is pretty much a standard in conventional mortgage markets, both historically and currently. That clearly wasn’t the case in “the bubble” but I think we are back to reality now.[/quote]I don’t think this is an accurate statement for people that would be classified as workforce under the model discussed in Wikipedia.

    IMO, structuring a Davis workforce housing model around people that can pull together a 20% down payment would be elitist. I would argue that the benchmark should be the minimum FHA down payment; and if people are fortunate enough to have a larger down payment, then they could obviously elect to buy more house.

  82. To Matt

    [quote]what is your rationale on the buyers having virtually no savings?[/quote]Real world experience.

    But, as I said earlier, I will check with a mortgage broker that services first time home buyers in the income range that we are talking about to see what the situation is at the present time and his projections going forward. Probably won’t be until Friday.

    If anyone has first hand knowledge, feel free to weigh in.

  83. Matt Williams

    [quote]To Matt said . . .

    IMO, structuring a Davis workforce housing model around people that can pull together a 20% down payment would be elitist. I would argue that the benchmark should be the minimum FHA down payment; and if people are fortunate enough to have a larger down payment, then they could obviously elect to buy more house.
    [/quote]
    Res ipsa loquitur

  84. Affordable Housing

    I’m getting an average price of $200,000 for workforce housing

    The range is $98,000 to $302,000.

    The assumptions are:
    1) 3.5% down payment
    2) 6% interest rate
    3) 30 year fixed rate mortgage
    4) $300/yr insurance
    5) 1% local taxes (I know this is low)
    6) CMSA annual median household income of $53,789 (see MW @ 12:41 pm)
    7) Workforce housing model discussed in Wikipedia excepted above

  85. Matt Williams

    AH, using your assumptions of a 1% local tax rate and a 6.0% interest rate, the top end would rise to $355,000 ($387,000 if you include a $200/month utilities savings). The lower end would be $118,000 ($150,000 with the utilities savings).

    For every 0.5% drop in the interest rate you add $12,000 to the purchase price.

  86. Affordable Housing

    The results of my workforce housing calculations:
    (assumptions listed in 5:55 pm post)

    ———–

    [u]Without energy savings:[/u]

    Average – $200,000

    Range – $98,000 to $302,000

    ———-

    [u]With $200/mo energy savings:[/u]

    Average – $231,000

    Range – $128,000 to $333,000

  87. Affordable Housing

    I also did a quick calculation using my actual tax rate (from 2007/8 – 1.29%) on one data point.

    That dropped the top end on the baseline calculation from $302,000 to $292,000.

  88. Matt Williams

    AH, I’m using the PITI Calculator at [url]http://www.realestateabc.com/calculators/PITI.htm[/url]

    A $284,000 principal amount @ 6.0% for 30 years produces a Principal & Interest monthly payment of $1702.72. With 20% down the purchase price would be $355,000, and the taxes @ 1% would be $295.83 per month. Homeowners insurance at $25.00 per month produces a total monthly payment of $2,023.55.

    A $272,000 principal amount @ 6.0% for 30 years produces a Principal & Interest monthly payment of $1,630.77. With 20% down the purchase price would be $340,000, and the taxes @ 1.29% would be $365.50 per month. Homeowners insurance at $25.00 per month produces a total monthly payment of $2,021.27

  89. Matt Williams

    Using the HUD number

    A $280,815 principal amount @ 6.0% for 30 years produces a Principal & Interest monthly payment of $1,689.41. With 3.5% down the purchase price would be your $292,000, and the taxes @ 1.29% would be $313.90 per month. Homeowners insurance at $25.00 per month produces a total monthly payment of $2,028.31.

    I still don’t understand why you don’t think a dual working couple wouldn’t have $60,000 in their savings. Assuming they have been working for 10 years, saving $60,000 means they have been saving at a rate of $1 for every $15 they have earned or $5,500 per year. Is that an unreasonable assumption? I don’t think Susie Orman would think so. And that doesn’t even take into consideration any contributions from both sets of parents toward the down payment.

  90. PRED Old Timer

    Since it was asked, combined gross income is 78k annually. We’re both college educated, my husband has a masters. We’re considered doing ok by UCD standards which tells you how bad it is. Asst2s and 3s make up the bulk of UCD staff and Analyst 2s and 3s the majority of the professional series.

    To qualify for FHA type financing, which includes VA, HUD, CalFHA, etc.) the PITI (property, interest, taxes, insurance) needs to be no more then 33% max and total DTI (debt to income) of no more then 41% . When dealing with townhouses, they have HOAs and other fees included which often makes them unavailable for purchases. I have seen a single car payment knock a family out of the 41% DTI ratio. Add a student loan and I don’t know of a single family that could afford a WHR or WV unit.

    Also, consider the effect that Mello Roos and other associated city fees have on the same equation. Their taxes will be far higher then most realize.

    Another stumbling block on the way to establishing any condo or townhouse as purchaseable using FHA is that a certain percentage of the units must sold beforehand. This is FHA’s way of determining the market price. So you will need people with conventional financing to buy into the development first. Has anyone tried getting a conventional loan lately? It’s a whole new world out there post Aug 2008 in terms of financing.

    As far as salaries, wages aren’t as high as people think for the majority of UCD employees, including asst professors. see here for scales http://www.hr.ucdavis.edu/Salaryscales/Salary

    One thing to remember when looking at the scales is that the majority of the people who have changed positions or been hired by UCD in the past 10 years are still at step 1 to 2. Merit increases have been effectively terminated by CUE and some of the other unions in favor of cost of living increases. I could go on for hours over the issues surrounding COLA increases vs. merits but that it a soapbox for another time. My point is that majority of people who have been here years and who are in the step 4 to max ranges bought homes in Davis years ago. When looking at wages of people who need work force housing, most are making below 35k.

    As to savings, if you are working for UCD, renting in Davis, are a young family, or don’t have some other sort of income to augment your earnings, you will be lucky if you save 2500 a year and that is likely in a 401k which will give you a 30% tax hit upon withdrawl.

    On the 50% discount being given on WV, this is the first time I have ever heard of it. I’ll believe it when I see it. If it’s real, I’m sure it will be reserved for a handful of homes going to someone special hand-picked by the chancellors or reagents to make a good press release. I expect zero benefit to the common UCD worker which has been par for my almost 10 years here.

    Routinely, the message to UCD employees from the city of Davis has been “we want you are consumers but not residents” and from UCD to it’s staff is “If you aren’t faculty, you don’t count”. I don’t expect this to change any time soon.

  91. PRED Old Timer

    Don,

    Energy conservation does nothing to make these projects affordable. The rules that HUD and FHA use are quite strict and utilies bills never figure into the equation.

    I agree with the poster above, depending on money from family needs to be left out of the discussion. In times past, parents could HELOC their homes for college or downpayment money for their kids. Like easy conventional financing, those days are over. Do we really want to perpetrate a landed gentry class structure? Well we are taking about Davis so this may be the case.

    One more thing that occured to me. Since there are restrictions on habitation by employer and the land is leased not owned etc., I’m not sure if they could be financed by FHA. I’d need to see the complete title docs and check with the various agencies.

  92. Don Shor

    This has been a very useful discussion. Clearly there are a lot of variables, but I think that $100 – $300K is a workable definition of affordable housing, with an average of $200K.

    There is little if anything in West Village to solve the shortage of housing for lower-income UCD workers in Davis. There is nothing in West Village or Wildhorse Ranch, or any other project I’m aware of, to solve the critical shortage of housing for renters. A lot of the workers in Davis don’t work at UCD: the people who work at local businesses, school district, state, PG&E, etc. They are forced to compete in a very tight rental market and very likely have little hope of ever buying a home here. We need a definition of affordable housing for renters, based on the market principles of 30% of income for housing and rent @ 3% of the value of the property. $10 an hour = $20,800/year income. In all of the discussion about development and affordable housing, this is the group that is always left out.

    I don’t personally know anybody who was able to finance their first home with 20% down payment from savings. Everyone I know either got help from family or had a much lower down payment.

  93. Workforce Housing

    FNA “Affordable Housing”

    I decided to do a more rigorous analysis, so I set up a spreadsheet. My previous numbers underestimated local taxes and homeowner’s insurance. In this analysis I used actuals from my own home for the numbers that were underestimated.

    [u]The new calculated values for workforce housing are:[/u]

    Average – $191,098

    Range – $95,513 to $286,682

    [u]The assumptions are:[/u]

    1) 3.5% down payment
    2) 6% interest rate
    3) 30 year fixed rate mortgage
    4) 0.21% insurance
    5) 1.29% local taxes
    6) CMSA annual median household income of $53,789 (MW @ 12:41 pm)
    7) Workforce housing model discussed in Wikipedia (excerpted above)

    [u]The following expenses were left out of the calculation:[/u]

    1) Private mortgage insurance
    2) Homeowners Association dues
    3) Special taxes (e.g. Mello-Roos/CFD)

    ———————————————–

    Matt appears to be trying to make the case that WHR could be considered workforce housing (I’m not implying that there’s anything wrong with that) by making some assumptions that increase the top of the range; specifically a 20% down payment and $200/mo energy savings offset. Under this scenario, the calculated values are:

    Average – $255,441

    Range – $144,218 to $366,664

    These numbers are overestimates and represent a best case scenario.

    The WHR project will have both a Homeowners Association and Mello-Roos taxes (which will at least partially negate the effects of a larger down payment and energy savings offset).

    Once these two expenses are estimated, I can easily redo the analysis and provide updated figures.

    ———————————————–

    The calculated values for workforce housing are obviously sensitive to interest rates, down payment, the CMSA median household income, the 50%-150% spread, and the 30% PITI limit. These can all be adjusted to try and build a case that more expensive housing could be classified as workforce. I personally don’t like this approach because IMO it’s cooking the data.

    I’ve tried to do an unbiased analysis based on an independent model of workforce housing to start to get a sense of what’s possible in Davis.

    The next step is to look at current costs per square foot for housing in this segment of the market (with estimates of real estate price recovery over the next few years) to see what range of housing sizes would fall within the framework of this model.

  94. My View

    “This has been a very useful discussion. Clearly there are a lot of variables, but I think that $100 – $300K is a workable definition of affordable housing, with an average of $200K.”

    Interestingly, in a previous thread, this was the figure I suggested was “affordable workforce housing” w/o having done any number crunching. It is what my intuition told me, after having been a homeowner for a number of years. I think the calculations above have been very useful to bolster my original argument, that WHR does not really provide “affordable workforce housing”. What is also troublesome to me is leaving out of any calculations things like Mellos-Roos taxes, homeowner association fees, which are substantial costs to the homeowner that must be borne.

  95. Workforce Housing

    [quote]What is also troublesome to me is leaving out of any calculations things like Mellos-Roos taxes, homeowner association fees, which are substantial costs to the homeowner that must be borne.[/quote]I can rerun the calculations and post the results if anyone would provide a reasonable estimate for these costs.

    A Mello-Roos estimate can probably be gotten from the city staff, but Homeowners Association dues may need to be estimated based on comps.

  96. earoberts

    “A Mello-Roos estimate can probably be gotten from the city staff, but Homeowners Association dues may need to be estimated based on comps.”

    HOA assessments would probably run about $350 per month for townhomes with a common roof/common areas to be maintained. Since WHR is a new development, the HOA assessments could be much, much lower to begin with, then rise in future years as more maintenance is needed. Assessments may start out as little as $50 a month to provide for basic landscaping services only, altho there would have to be a push to build up a reserve account to pay for future maintenance. So I would take as an estimate for HOA fees the average of $50 per month and $350 per month = $150 per month. My best guesstimate.

  97. Matt Williams

    [quote]Workforce Housing said

    Matt appears to be trying to make the case that WHR could be considered workforce housing (I’m not implying that there’s anything wrong with that) by making some assumptions that increase the top of the range; specifically a 20% down payment and $200/mo energy savings offset. [ . . . ] These numbers are overestimates and represent a best case scenario.

    The calculated values for workforce housing are obviously sensitive to interest rates, down payment, the CMSA median household income, the 50%-150% spread, and the 30% PITI limit.

    These can all be adjusted to try and build a case that more expensive housing could be classified as workforce. I personally don’t like this approach because IMO it’s cooking the data.

    I’ve tried to do an unbiased analysis based on an independent model of workforce housing to start to get a sense of what’s possible in Davis.

    The next step is to look at current costs per square foot for housing in this segment of the market (with estimates of real estate price recovery over the next few years) to see what range of housing sizes would fall within the framework of this model.[/quote]
    How workforce is defined is pretty much going to be based on the single variable . . . household income. The rest of the information we have wrestled with are simply scenario analyses within that simple definition.

    To exclude any of the scenarios at this point is pure and simple foolishness IMHO . . . either that or gaming the system to achieve a predetermined outcome.

    To illustrate my point lets answer a series of questions

    1) If all 78 Townhomes were purchased by Davis households that fell within the $81,000 to $27,000 Income range, would that be a good outcome?

    2) If all 78 of those purchases were made with a 20% downpayment, would that be a good outcome?

    3) If all 78 of those purchases were made with a 3.5% downpayment, would that be a good outcome?

    4) Is the outcome in 3) a better outcome than the one in 2)?

  98. Matt Williams

    Let me be crystal clear. What we absolutely don’t want is new housing that is priced in such a way that instead of 78 townhomes going to the Davis workforce, we have 0 townhomes going to the Davis workforce. The quickest way to achieve that is by pricing the units at a non-attainable level.

    For me the best possible outcome would be that we have too many applicants from the workforce demographic. If that happens we can sit down and create solutions for that problem and in the process make Davis a more sustainable community.

  99. Mike Harrington

    A rule of thumb for monthly outgo for property:

    A monthly payment for your mortgage payment, taxes, and insurance equals about 1% of the loan value.

    So a $300,000 mortgage will appx. require a $3,000/month payment.

  100. anon

    I don’t understand why people assume that below-market price housing should necessary be made available to lower income workers. My mother was a high school teacher back east, and we certainly could not afford to live in the upper-middle-class neighborhood where she worked. We lived 10 miles away and she drove to work. Problem solved. I don’t mean to sound mean or petty, but I find all this computing and hand-wringing rather silly. There are many places in the US where people commute to work from less expensive neighborhoods.

  101. Workforce Housing

    Matt:

    Don’t get stuck on 20% down. No scenarios are being included or excluded. What we need at this point is a benchmark for what could realistically qualify as “workforce housing.”

    Assuming that such product gets built in the future, some buyers will put down the minimum and some buyers may put down 20% (or more). Some buyers will have to use their own assets for the down payment and some buyers will get help from their families. Some buyers will be single parents and some will be DINKs.

    To set the benchmark at anything above a minimum entry point is IMO cooking the data. If you’re looking for an outcome that overlaps with the projected prices at WHR, one would have to structure a scenario that won’t pass the smell test.

    For example, to get to $400,000 at the [u]top[/u] of the range – you have to assume 25% down, no energy bills, no PMI, no Mello-Roos, and free cable TV.

  102. Workforce Housing

    E Roberts Musser:

    Thanks for your input. $150/mo Homeowner Association fees would obviously wipe out most, if not all, the energy savings. At first glance I thought the number seemed high, but then I remembered that the project has a significant amount of privately-maintained open space. Now I’m wondering if it’s too low.

    FWIW, when you include this in the baseline model (including a $200/mo energy offset specific for WHR) the resulting numbers are:

    Average – $198,205

    Range – $102,620 – $293,789

    When we get an estimate of the Mello-Roos taxes, that will give a pretty good baseline model for WHR (my personal bias is that PMI should be excluded from the analysis since it only applies to some buyers).

    Once that is done, I’ll run some sensitivity analysis on interest rates and % down payment to give a more complete picture.

  103. Workforce Housing

    Matt wrote:[quote]Let me be crystal clear. What we absolutely don’t want is new housing that is priced in such a way that instead of 78 townhomes going to the Davis workforce, we have 0 townhomes going to the Davis workforce. The quickest way to achieve that is by pricing the units at a non-attainable level.[/quote]I absolutely agree.

  104. PRED Old Timer

    anon,

    Davis already has a reputation for being white, wealthy, aging, and elitist. The point is what do you want Davis to be? If you keep pricing out your workforce, all the amintenance to the roads, the increased pollution, and the deteriorating inferstructure will need to be paid for by Davis while all the revenue from goods, services, and property taxes will be going to those outlying areas.

    Mike,

    That is much like the 3x annual gross income benchmark and it’s a great place to start examining affordability. Using that equation, my husband and I can afford no more then If you were to assume that I could afford a house for 228k with a 2280 mo payment. That would probably be fine if we were DINKs and had no other debt. Figuring in student loans, 1 car payment with ins and basic utilities, we’d be $500.00 away from insolvancy each month. No cell phones, no cable, no CC debt. This is what those younger families Davis keeps wanting to attract are facing.

  105. PRED Old Timer

    Just so it’s clear, I am not advocating for myself. We will not be buying in Davis ever. We purchased a SFR (no MR or HOA) in Sacramento for half of what a WV townhome would cost us. Both of us will move to UCDMC as soon as we can change positions. You’ve run one family out of town, how many more do you want to chase away?

  106. Matt Williams

    [quote]PRED Old Timer said . . .

    Just so it’s clear, I am not advocating for myself. We will not be buying in Davis ever. We purchased a SFR (no MR or HOA) in Sacramento for half of what a WV townhome would cost us. Both of us will move to UCDMC as soon as we can change positions. You’ve run one family out of town, how many more do you want to chase away?[/quote]
    Your two posts are very helpful PRED Old Timer, thank you for the candid input. If you don’t mind, I’d like to ask you a few follow up questions about theis connundrum Davis faces.

    Given the special incremental quality of life components of Davis that none of the other regional cities have, won’t Davis housing always command a premium over those other cities?

    I know there are no simple answer to the following questions, but they are part of the total equation . . .

    A) How much does the Mondavi Center add to the value of a Davis home?

    B) How much does the presence of UCD and all its faculty and staff add?

    C) How much do Davis’ highest quality schools add? (Although I personally don’t agree with this point, one poster said in a prior post that he and his spouse would have to pay private school tuition if they moved away from Davis)

    D) How much does Davis’ superb library add?

    E) How much does Davis’ low crime rate add?

    I could go on with this list, but my basic point is that when wrestling with the trgedy of your last sentence, what can Davis actually do to prevent that from happening over and over and over again? It is a serious conundrum.

  107. earoberts

    “Thanks for your input. $150/mo Homeowner Association fees would obviously wipe out most, if not all, the energy savings. At first glance I thought the number seemed high, but then I remembered that the project has a significant amount of privately-maintained open space. Now I’m wondering if it’s too low.”

    Eventually the HOA assessments will have to go up to $350 per month (present value) or a bit more, as the facility ages. This is to cover the costs of maintaining common roof and wall areas of the townhomes, as well as the upkeep of the common areas, which includes a large orchard. Furthermore, many wealthier residents want more Cadillac services to keep the property values up, bc they can better afford that respective increase in costs. On the other hand, workforce families will have a difficult time managing the ever increasing HOA assessments. It is a natural tension in any HOA.

    But my guess is the initial HOA assessments will be kept artificially low to make the development more attractive to buyers. This is always the problem with HOAs. It is when all the units are sold that the HOA games begin with increased costs. Since we have to pick a number, I selected an amount that was the average of what might be an initial payment and what it will probably end up being in future years at present value [($50 + $350)/2] = $150. In a few years, that figure will most definitely be too low.

  108. Don Shor

    “Given the special incremental quality of life components of Davis that none of the other regional cities have, won’t Davis housing always command a premium over those other cities?”

    Historically — going back to the mid-1970’s when I first started comparing housing prices between Davis, Woodland, and Dixon — that has been about 10 – 20%.

  109. Workforce Housing

    Constituent request to Sue Greenwald:

    Sue. Would you be willing to ask staff to estimate the average monthly Mello-Roos payment for the proposed WHR project, and then post the answer? Thanks for any help.

  110. Matt Williams

    First, I spoke to a person I respect in the mortgage industry about the discussions we have been having. He uses 0.25% for insurance rather than the 0.21% figure we have tentatively been using. Other than that he feels we are in the process of putting our hands around the right issues and parameters.

    So FWIW, here is my bottom-line statement based on the rich and respectful discussions of the parameters of Workforce Housing in this thread.

    Housing with a price at or below $350,000 has the [u]potential[/u] to address the needs of the Davis Workforce Housing population cohort (with an annual household income of between $27,000 and $81,000). Global factors such as interest rate and individual factors such as household income, credit score, debt load, funds available for a downpayment, taxes, homeowners association fees, etc. will be key realities that will determine the specific price that a Davis Workforce household can reasonably afford. In virtually all cases those factors will mean the attainable purchase price will be lower than $350,000. Therefore, $350,000 should be considered a “best case scenario.” Pricing alone does not produce a successful “Workforce Housing” initiative. A successful “Workforce Housing” initiative is defined by completed purchases by members of the Davis Workforce Housing population cohort (with an annual household income of between $27,000 and $81,000).

  111. Don Shor

    “…at or below $350,000…”
    I’d say $300,000, and that is at the very highest end of the income range. “Workforce housing” should average $200,000.
    I’m not sure why one would want to put forth a statement that identifies the highest-priced housing based on the most favorable criteria, rather than one that identifies what the optimal or average workforce housing project would include. I would hate to see a developer build a bunch of homes, price a few of them at $350,000, and then use this statement to declare that they are providing workforce or affordable housing.

  112. Matt Williams

    Don the simple reason for that is that if you define a mid range you leave to the imagination what the upper boundary is. The mid range for one couple will be different than for another couple. By defining the upper boundary and saying that as long as the couple is in the requisite income range then anything below the upper bondary is “in” and everything above is “out”

    There is IMHO no way not to run the numbers and define the best case scensrio.

    One question, if a couple makes $79,000 and qualifies to purchase a $350,000 home are you saying that that isn’t a “Workforce Housing” purchase?

  113. Matt Williams

    No developer in this town would be able to get away with doing what you describe in your final sentence. With that said, I would absolutely hate it too. I think we could raise our voices in unison on that.

  114. Workforce Housing

    On 7/29/2009. David Greenwald wrote:[quote]… a Community Facilities District (CFD) that would equate to $300 per unit per year[/quote]This was the missing piece of the equation.

    Here is a run of the workforce housing model with all the WHR-specific variables included.

    [u]Baseline calculated price for attainable workforce housing at WHR:[/u]

    Average – $154,831
    Range – $59,697 to $249,965

    [u]The assumptions are:[/u]

    1) 3.5% down payment
    2) 6% interest rate
    3) 30 year fixed rate mortgage
    4) 0.25% insurance
    5) 1.29% local taxes
    6) CMSA annual median household income of $53,789
    7) Maximum threshold of affordability – 30% of annual household income
    8) Range calculated based on 50% to 150% of median household income
    8) No private mortgage insurance
    9) $300/mo Mello-Roos taxes
    10) $150/mo HOA dues
    11) $200/mo energy savings offset

  115. Workforce Housing

    [quote]I’d say $300,000, and that is at the very highest end of the income range. “Workforce housing” should average $200,000.[/quote]Don:

    The model that I’ve been running supports your position.

    With respect to the WHR scenario, the average buyer will be able to afford approximately 20% less house because the HOA dues and Mello-Roos taxes overwhelm the energy savings. That’s why the numbers I just posted are coming in lower for WHR than your generalization quoted above.

  116. Matt Williams

    Workforce Housing, please answer three questions for me

    1) Is there a particular reason why you want to exclude selected members of the Workforce Housing population cohort from your calculations?

    2) Are Mello-Roos taxes on a $300,000 residence really $3,600 per year?

    3) Were you being disingenuous when you said, “Don’t get stuck on 20% down.”

    4) Are you stuck on 3.5% down?

  117. Don Shor

    “if a couple makes $79,000 and qualifies to purchase a $350,000 home are you saying that that isn’t a “Workforce Housing” purchase?”
    I would say it is anomalous, and that $350,000 homes aren’t workforce housing.
    From the HomeFront column in yesterday’s (Aug 14) Sacramento Bee ([url]http://www.sacbee.com/business/story/2108425.html[/url), there is this interesting quote:
    “… when buyers hew to an old-fashioned rule of real estate: buying at a price three times their annual household income. Builders say buyers have to toe that line now. They can’t get loans to buy higher.”
    So your homebuyer with $79,000 annual income should be buying a home at just under $240,000. You know: an affordable, work-force home.

    The thing is, Matt, this is all going to come up again during the Measure J campaign this fall, and probably again in future development campaigns. So a clear, simple definition of workforce and affordable housing is going to be necessary. If it’s more than $300,000, it isn’t.

  118. earoberts

    I’m in agreement with Workforce Housing and Don Shor. $300,000 should be the high end of “affordable workforce housing”, and that is particularly true in today’s tighter credit market and in light of the mortgage meltdown. I would rather see a couple buy less house, but be secure in knowing they can make their monthly payments comfortably. Very enlightening discussion.

  119. Matt Williams

    Elaine, interesting comment. If I understand you right, you believe a couple that works in Davis earning $79,000 and puts $70,000 down on a $350,000 home with financing via a conventional mortgage is [u]not[/u] a “Workforce Housing” transaction. You are excluding that couple from the cohort?

    Is that right?

  120. Don Shor

    Actually Matt, it doesn’t even fit into the affordable housing ordinance used by the City of Davis. They use an income range of 80 – 120% of Yolo County median income, and the highest price allowed price for a 3-bedroom unit at 120% of median income is $299,779 to qualify as affordable housing. Using round numbers, the range is $177K to $300K using those guidelines.

  121. Matt Williams

    [quote]
    Don Shor said . . .

    I would say it is anomalous, and that $350,000 homes aren’t workforce housing.

    From the HomeFront column in yesterday’s (Aug 14) Sacramento Bee (http://www.sacbee.com/business…g quote:
    “… when buyers hew to an old-fashioned rule of real estate: buying at a price three times their annual household income. Builders say buyers have to toe that line now. They can’t get loans to buy higher.”

    So your homebuyer with $79,000 annual income should be buying a home at just under $240,000. You know: an affordable, work-force home.

    The thing is, Matt, this is all going to come up again during the Measure J campaign this fall, and probably again in future development campaigns. So a clear, simple definition of workforce and affordable housing is going to be necessary. If it’s more than $300,000, it isn’t. [/quote]
    Don, I took the time yesterday to contact mortgage lenders. Not one of them said anything like what Homefront said. They all said buying with a mortgage that is one third (some said 30%) of their annual income. I asked each of them if they were placing any mortgages at that level and they said they were.

    Bottm-line you are being exclusionary in your definition and I am being inclusionary. That doesn’t make either of us right . . . just different.

    All I want to do is see more Davis workers with incomes of $81,000 per year and below being able to buy the home of their dreams and in the process make this community more sustainable.

  122. Don Shor

    I said, “I would hate to see a developer build a bunch of homes, price a few of them at $350,000, and then use this statement to declare that they are providing workforce or affordable housing.”

    You replied, “No developer in this town would be able to get away with doing what you describe in your final sentence. With that said, I would absolutely hate it too. I think we could raise our voices in unison on that.”

    WHR achieved affordable housing certification by including 38 apartments in a project of 191 units. City requirement is for 25% affordable, or 20% with an allowance for density. 38/191 = 19.9%.

  123. Workforce Housing

    Matt:

    “Workforce Housing, please answer three questions for me”

    I’d be happy to answer all four.

    “1) Is there a particular reason why you want to exclude selected members of the Workforce Housing population cohort from your calculations?”

    I’m not excluding anyone / I’m not including anyone. I started with a reasonable definition of workforce housing, and constructed a simple economic model. The results are what they are.

    The accusatory tenor of your question is a little offensive. I’ve worked pretty hard to put this together, and your response to the outcome is to try and indict my motives? That’s not nice.

    It’s absolutely transparent to everyone that reads this blog that you have a bias. That’s OK … but don’t insinuate that I have one because the numbers don’t fit your preconceived position.

    If you will give me an estimate for the likely prices of the WHR homes, I would be happy to rerun the model and identify how the baseline variables will need to be adjusted so that Parlin can claim that they are providing “workforce accessible” housing under this type of model. We already have a credible estimate of the likely prices from the city staff, but I seem to recall a post where you claimed that you have had direct communications with the developers and/or their consultants; so if you have better information – now’s the time to put it on the table.

    “2) Are Mello-Roos taxes on a $300,000 residence really $3,600 per year?”

    I don’t know. I’m simply using the number reported by David Greenwald. As you know, he is a source of very detailed inside information about the WHR project. I’ve asked Sue Greenwald to get a number from the City Staff. Maybe you can get an estimate directly from the developers.

    Because the Mello-Roos is designed to generate a fixed amount of income, the average amount per unit across the entire project will be independent of the size of houses that are actually built.

    “3) Were you being disingenuous when you said, “Don’t get stuck on 20% down.”

    Nope. Just gently suggesting that your logic supporting this position is pretty weak. Don and others have also tried to point this out. To be perfectly blunt, arguing that we need to base a Davis workforce housing model on some obtuse argument that people “should” be able to come up with 20% down is not appropriate.

    “4) Are you stuck on 3.5% down?”

    Nope. The number is from the FHA. It is the appropriate baseline to use when calculating “affordability” of workforce housing. How the circumstances of particular buyers fit within this framework is irrelevant to the modelling process.

  124. Matt Williams

    [quote]Matt:

    “Workforce Housing, please answer three questions for me”

    I’d be happy to answer all four.

    I’m not excluding anyone / I’m not including anyone. I started with a reasonable definition of workforce housing, and constructed a simple economic model. The results are what they are.[/quote]
    Not correct. Your model excludes every single buyer who does happen to have a 20% downpayment. When I pointed that out to you you chose to ignore it. Why are you being exclusionary?

    [quote]The accusatory tenor of your question is a little offensive. I’ve worked pretty hard to put this together, and your response to the outcome is to try and indict my motives? That’s not nice.[/quote]
    What are your motives? I have stated mine repeatedly. I want to end the over 10 year history of treating the Davis workforce as stepchildren. Davis workers have been disenfranchised for too long. I’m fighting for the maximization of their opportunities to purchase a home of their own.

    [quote]It’s absolutely transparent to everyone that reads this blog that you have a bias. That’s OK … but don’t insinuate that I have one because the numbers don’t fit your preconceived position.[/quote]
    The housing market throughout the 20th Century across the USA operated on the principle of 20% down. That is what was required of me in 1975 when I purchased my first house. It is really only in very recent history that mortgages with smaller downpayment percentages have become available. 3.5% down puts the buyer on the razors edge of getting “upside down” in their homes. Haven’t you learned anything from the Housing Bubble? I’m not acusing you of anything other than shortsightedness. Elaine Musser argued for virtually the same thing I am arguing for when she said “I would rather see a couple buy less house, but be secure in knowing they can make their monthly payments comfortably.” Just like buying a smaller house does, making a substantial downpayment decreases the likelihood of a couple experiencing a fiscal crisis. If you believe reducing the number of fiscal crises is a “transparent bias” then so be it. That is a bias I’m proud to have.

    [quote]If you will give me an estimate for the likely prices of the WHR homes . . . [/quote]
    This discussion has been theoretical. Not once has the price of specific homes been addressed. When it comes to pricing the only thing I [u]know[/u] is that every single Chiles Ranch home will be priced above even the most optimistic “Workforce Housing” attainability model. Same for Grande. Which means that the sordid history of abandoning this city’s workforce is on track to continue unabated.

    [quote]. . . so that Parlin can claim that they are providing “workforce accessible” housing under this type of model.[/quote]
    It really doesn’t matter what Parlin claims. The reality is that if we don’t do something about addressing situations like PRED Old Timer’s, which is the starting point of this whole discussion, then the economic sustainability and the quality of life sustainability of Davis will continue to deteriorate. Why do you want to abandon Davis’ workforce? Don Shor doesn’t want to . . . Elaine Musser doesn’t want to . . . You sem to be more interested in your financial model than in real people. Am I missing something?

    [quote]We already have a credible estimate of the likely prices from the city staff, but I seem to recall a post where you claimed that you have had direct communications with the developers and/or their consultants; so if you have better information – now’s the time to put it on the table.[/quote]
    My direct communications with the developers has been a constant and consistent lobbying for attainable pricing for Davis’ disenfranchised, abandoned stepchildren. To the best of my knowledge the final pricing has not been determined. So WHR pricing is something I can’t help you on.

  125. Matt Williams

    [quote]“2) Are Mello-Roos taxes on a $300,000 residence really $3,600 per year?”

    I don’t know. I’m simply using the number reported by David Greenwald. As you know, he is a source of very detailed inside information about the WHR project. I’ve asked Sue Greenwald to get a number from the City Staff. Maybe you can get an estimate directly from the developers.

    Because the Mello-Roos is designed to generate a fixed amount of income, the average amount per unit across the entire project will be independent of the size of houses that are actually built.[/quote]
    Look back at your own post.
    Workforce Housing

    08/15/09 – 01:25 AM

    On 7/29/2009. David Greenwald wrote:

    … a Community Facilities District (CFD) that would equate to $300 per unit per year

    This was the missing piece of the equation.

    [quote]“3) Were you being disingenuous when you said, “Don’t get stuck on 20% down.”

    Nope. Just gently suggesting that your logic supporting this position is pretty weak. Don and others have also tried to point this out. To be perfectly blunt, arguing that we need to base a Davis workforce housing model on some obtuse argument that people “should” be able to come up with 20% down is not appropriate.[/quote]
    How is my logic weak? During virtually the whole 20th Century nothing less than 20% down was allowed by the banks who provided mortgages. I would venture to say that it is only in the 21st Century where anything other than 20% down became the norm. To this day the total number of 20% down transactions dwarfs the number of less than 20% transactions.

    [quote]“4) Are you stuck on 3.5% down?”

    Nope. The number is from the FHA.[/quote]
    Why is FHA your bible? Why not Fannie Mae? Why not Freddie Mac?

    [quote]It is the appropriate baseline to use when calculating “affordability” of workforce housing. How the circumstances of particular buyers fit within this framework is irrelevant to the modelling process.[/quote]
    You say it is the appropriate baseline. Appropriate how? At 3.5% you are excluding lots members of the “Workforce Housing” cohort. At the “20% or lower” no member of the cohort is excluded. What is your bias that is driving your desire to exclude portions of the cohort?

  126. Matt Williams

    [quote]
    Don Shor said . . .

    Actually Matt, it doesn’t even fit into the affordable housing ordinance used by the City of Davis. They use an income range of 80 – 120% of Yolo County median income, and the highest price allowed price for a 3-bedroom unit at 120% of median income is $299,779 to qualify as affordable housing. Using round numbers, the range is $177K to $300K using those guidelines. [/quote]
    I hear you Don. If we were talking about the “Affordable Housing” population cohort I would agree with you. However, that is a very different cohort. What I’ve been talking about (and I apologize if I haven’t been clear about this) is the “Workforce Housing” population cohort. The income range of that cohort was posted by WH based on a Wikipedia listing.

  127. Matt Williams

    [quote]Don Shor . . .

    WHR achieved affordable housing certification by including 38 apartments in a project of 191 units. City requirement is for 25% affordable, or 20% with an allowance for density. 38/191 = 19.9%.[/quote]
    Here too we are talking about two different population segments. Affordable units are rental units. The discussion we have been having has centered not on rental units but ownership units. Call me greedy if you will I want the 38 rental units [u]and[/u] attainably priced ownership units as well.

  128. Workforce Housing

    I’ll take these one at a time …

    Matt Williams wrote:[quote]Your model excludes every single buyer who does happen to have a 20% downpayment.[/quote]This is a bizarre assertion.

    The model is just a mechanism to estimate what an appropriate price range for workforce housing might be. Nobody is being “excluded” or “included.” It’s just a financial model. By using the FHA minimum of 3.5%, the number of people that can be served by housing that conforms to the model is maximized.

    To build the model around the baseline of a 20% down payment, on the other hand, would be exclusionary.

    [quote] When I pointed that out to you you chose to ignore it. Why are you being exclusionary?[/quote]I ignore it because it makes no sense. Why do you continue to harp on the assertion that anyone that won’t endorse your 20% down metric is being exclusionary? It serves no purpose and is turning a productive dialog unpleasant.

  129. Workforce Housing

    Matt Williams wrote:[quote]What are your motives?[/quote]I think I’ve made that clear. I’m trying to come up with a rational definition of what constitutes “workforce housing” in Davis.

    If that encompasses all or part of the WHR product, that’s great. If it doesn’t, so be it.

    What I won’t do is fudge the model with an assumption of high down payments to push the upper end of the range to overlap with the WHR price structure.

  130. Workforce Housing

    Matt Williams wrote:[quote] You sem to be more interested in your financial model than in real people. Am I missing something?[/quote]Obviously, you are.

    Why are you personalizing this with offensive rhetoric?

  131. Workforce Housing

    [quote]Why is FHA your bible? Why not Fannie Mae? Why not Freddie Mac?[/quote]It isn’t. In fact, in the next iteration I will probably bump the baseline to the 5% minimum for a conventional loan. It is now my understanding that minimum down payment FHA loans apparently require something called “up front mortgage insurance” which is too difficult to deal with in a financial model of this type.

  132. Matt Williams

    You are being obtuse. Lets look at the numbers. With your downpayment single VHA value of 3.5% you end up with a pricing range with potential to satisfy Workforce Housing demand goes from $0 to $298,000, excluding everything above $298,000. FWIW, my model includes 100% of all your possible scenarios. It excludes none. Specifically, with my downpayment range of 20% on down to the VHA value, the pricing range with potential to satisfy Workforce Housing demand goes from $0 to $350,000, excluding everything above $350,000.

    Therefore if a couple comes in, qualifies for a mortgage, puts 20% down and purchases a $325,000 house in your scenario that is [u]not[/u] a transaction that has addressed the Workforce Housing demand. I very clearly see it as a transaction that does address Workforce Housing demand. I thought what we have been talking about throughout this thread is the issue PRED Old Timer raised in the first comment . . . addressing the workforce housing problem (and history) in Davis.

    Maybe you’ve been talking about Wildhorse Ranch the whole time. Is that the case?

  133. Matt Williams

    [quote]
    Workforce Housing said . . .

    It serves no purpose and is turning a productive dialog unpleasant.[/quote]
    Only unpleasant because it doesn’t support your agenda.

  134. Matt Williams

    [quote]Workforce Housing said . . .

    What I won’t do is fudge the model with an assumption of high down payments to push the upper end of the range to overlap with the WHR price structure.
    [/quote]
    High downpayments? What is it about downpayment history in this country that you don’t understand? 20% downpayments is the historical norm not the exception. A range of “20% and below” [u]includes[/u] FHA, Fannie Mae, and Freddie Mac.

  135. Workforce Housing

    [quote]You say it is the appropriate baseline. Appropriate how? At 3.5% you are excluding lots members of the “Workforce Housing” cohort. At the “20% or lower” no member of the cohort is excluded. What is your bias that is driving your desire to exclude portions of the cohort?[/quote]I have no bias. I have no need that my position be accepted.

    The model is built around 3.5% (soon to be 5%) and higher. It’s not capped at 20%. It doesn’t exclude anyone. It is completely neutral on socioeconomic status. It has no political bias, nor does it pretend to be the answer to the country’s economic problems or the solution to the long-standing neglect of this sector of the housing market in the City of Davis.

    I’ve tried to explain it as clearly as I know how. Based on some of the previous comments, other people seem to understand the utility of this approach.

  136. Matt Williams

    [quote]Workforce Housing . . .

    Why are you personalizing this with offensive rhetoric?[/quote]
    Simple. Your personal statements have consistently shown that the numbers matter more to you than the personal transactions that those numbers refer to. What is offensive about pointing out that you appear to care more about numbers than you care about people?

  137. David M. Greenwald

    Two points I’d like to raise. First, I talked to a realtor yesterday, probably for a future story or two, and was told right now unless you qualify for an FHA loan, you have to put 20 percent down.

    Second, the Mella Roos is $300 per year (as reported earlier) not per month as was included in WH’s calculations from last night.

  138. Workforce Housing

    David,

    Thanks for pointing out the error! I will correct the error later this evening.

    The mortgage broker (a friend) that I talked to today gave me a different story re: down payments. Regardless of what today’s situation is, the real issue is whether or not the housing markets will loosen up going forward.

  139. Workforce Housing

    [quote] Your personal statements have consistently shown that the numbers matter more to you than the personal transactions that those numbers refer to. What is offensive about pointing out that you appear to care more about numbers than you care about people?[/quote]And your personal statements have consistently shown that what you really care about grandstanding and being the center of attention. Your (to borrow a great verb from another thread) bloviating is utterly tiresome.

    I apologize if you find this offensive. But really, what is offensive about pointing out the truth?

    If you want to go down this track … I assure you that I will respond in kind.

  140. Workforce Housing

    E Roberts Musser wrote:[quote]I’m in agreement with Workforce Housing and Don Shor. $300,000 should be the high end of “affordable workforce housing”[/quote]Thanks for weighing in.

    Don,

    I’m a little confused with your affordable housing post. Are you saying that $177K to $300K is already defined in Yolo County as qualified affordable housing?

  141. Matt Williams

    [quote]Workforce Housing said . . .

    And your personal statements have consistently shown that what you really care about grandstanding and being the center of attention. Your (to borrow a great verb from another thread) bloviating is utterly tiresome.

    I apologize if you find this offensive. But really, what is offensive about pointing out the truth?

    If you want to go down this track … I assure you that I will respond in kind.[/quote]
    Since you want to get to the truth, why don’t you start by answering the following questions I asked you earlier, but you ducked.

    How workforce is defined is pretty much going to be based on the single variable . . . household income. The rest of the information we have wrestled with are simply scenario analyses within that simple definition.

    To exclude any of the scenarios at this point is pure and simple foolishness IMHO . . . either that or gaming the system to achieve a predetermined outcome.

    To illustrate my point lets answer a series of questions

    1) If all 78 Townhomes were purchased by Davis households that fell within the $81,000 to $27,000 Income range, would that be a good outcome?

    2) If all 78 of those purchases were made with a 20% downpayment, would that be a good outcome?

    3) If all 78 of those purchases were made with a 3.5% downpayment, would that be a good outcome?

    4) Is the outcome in 3) a better outcome than the one in 2)?

  142. Don Shor

    “Don,

    I’m a little confused with your affordable housing post. Are you saying that $177K to $300K is already defined in Yolo County as qualified affordable housing?”
    As far as I can tell, it is defined in Davis that way, using “Yolo County Area” median income. Here’s the link:
    [url]http://cityofdavis.org/housing/affordable/info.cfm[/url]
    Look for this pdf: Affordable Ownership Housing Requirements Summary and 2007-08 Prices

    Again, affordable tops out at $300K.

    Matt: “Affordable units are rental units. The discussion we have been having has centered not on rental units but ownership units. Call me greedy if you will I want the 38 rental units and attainably priced ownership units as well.”
    Other than the apartments, I have heard nothing to indicate that there will be any affordable units in WHR at all. Affordable housing in West Village, if any, will be provided by means of UC selling the property below market and with equity capped.

    Throughout this discussion, affordable housing has been defined. The term workforce housing has only been used in the context of affordable housing for UCD faculty and staff, i.e., “[t]his project is long overdue in terms of the need for affordable workforce housing for UC Davis faculty and staff.”

    Other than that, workforce housing has no real meaning. The chancellor is part of the workforce! My concern is for the residents of Davis who are at or below median income who have difficulty finding and paying for their housing, whether rented or owned. So all these questions about good/better outcomes are pretty irrelevant, since they all focus on purchase of housing by those at the very highest end of the median range for affordable at the most favorable mortgage terms.
    Does a proposed development help solve the most urgently pressed consumers of the housing market? Not if the homes are at $350K.

  143. Don Shor

    “1) If all 78 Townhomes were purchased by Davis households that fell within the $81,000 to $27,000 Income range, would that be a good outcome?”

    Not if all or most of them were purchased by Davis households that earned $80,999.

  144. Matt Williams

    Don, if those $80,999 households are part of the abandoned market segment . . . Davis Workers, how can it be a bad outcome. That outcome means that either 78 households that are currently commuting into Davis are now living in Davis, or 2) 78 households that are currently renting in Davis are now living in ownership homes, thereby freeing up 78 current rentals, or 3) some combination of 1) and 2) that adds up to 78. How can any of these outcomes be bad?

  145. Matt Williams

    Don, we’ll have to agree to disagree. The discussion hasn’t been about the “Affordable Housing” defined population cohort, but rather the group of people defined by the following earlier post

    “Matt Williams

    08/11/09 – 12:51 PM

    Adam, the problem with your approach is that over the past 10+ years developers in Davis have effectively made stepchildren of people like PRED Old Timer and her husband. Bottom-line, the price per unit of the units built in that period have been consistently outside the attainable price range. There are lots of reasons for that. One is beyond the developers’ control . . . the quality of life in Davis is very high relative to all California communities, and therefore living in Davis commands a premium when compared to other California communities. The second is very much in the developers’ control . . . the size of the units built. The bigger the house or townhome, the higher the price. “

  146. Workforce Housing

    David: Once again, thanks for pointing out the mistake in my Mello-Roos assumption (late night brain fog).

    The new calculations …

    [u]Baseline calculated price for workforce housing:[/u]

    Average – $191,164
    Range – $95,546 to $286,781

    The assumptions are:
    1) 5.0% down payment
    2) 6% interest rate
    3) 30 year fixed rate mortgage
    4) Insurance – 0.25%/year
    5) Local taxes – 1.29%/year
    6) Private mortgage insurance – 0.78%/year
    7) CMSA annual median household income of $53,789
    8) Maximum threshold of affordability – 30% of annual household income
    9) Range calculation based on 50% to 150% of median household income

    [u]Calculated price for workforce housing (WHR model):[/u]

    Average – $194,719
    Range – $99,101 to $290,336

    The addition assumptions are:
    1) $25/mo Mello-Roos taxes
    2) $150/mo HOA dues
    3) $200/mo energy savings offset

    ——————————–

    Now that all the variables are included in the model, here are simple sensitivity analyses (as promised) for interest rates and % down payment (Baseline model). The numbers are presented as – Average (Range)

    [u]Interest rates:[/u]

    5.5% $199,733 ($99,829 to $299,636)
    6.0% $191,164 ($95,546 to $286,781)
    6.5% $183,121 ($91,526 to $274,715)
    7.0% $175,571 ($87,753 to $263,389)
    7.5% $168,483 ($84,210 to $252,756)
    8.0% $161,827 ($80,883 to $242,779)
    8.5% $155,574 ($77,758 to $233,390)

    [u]Down payment:[/u]

    5% $191,164 ($95,546 to $286,781)
    10% $199,675 ($99,800 to $299,549)
    15% $208,978 ($104,450 to $313,506)
    20% $221,144 ($110,531 to $331,758) no PMI

  147. Matt Williams

    Excellent summary Workforce Housing. If we have each been grandstanding (what’s good for the goose is good for the gander), then the collective effort has been worth it. It is realistic, balanced and inclusive. Adding Private Mortgage Insurance (“PMI”) was a good get. I went out to Wikipedia to see what they had to say about PMI, and it was very useful.

    Private mortgage insurance (PMI) in the US, is insurance payable to a lender or trustee for a pool of securities that may be required when taking out a mortgage loan. It is insurance to offset losses in the case where a mortgagor is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property. Typical rates are $55/mo. per $100,000 financed, or as high as $1,500/yr. for a typical $200,000 loan.

    The PMI may be payable up front, or it may be capitalized onto the loan in the case of single premium product. This type of insurance is usually only required if the downpayment is less than 20% of the sales price or appraised value (in other words, if the loan-to-value ratio (LTV) is 80% or more). Once the principal is reduced to 80% of value, the PMI is often no longer required. This can occur via the principal being paid down, via home value appreciation, or both. In the case of lender-paid MI, the term of the policy can vary based upon the type of coverage provide (either primary insurance, or some sort of pool insurance policy). Borrowers typically have no knowledge of any lender-paid MI, in fact most “No MI Required” loans actually have lender-paid MI, which is funded through a higher interest rate that the borrower pays.”

    Although some direct verification with mortgage companies of current PMI practices is needed, it would appear that in calculating your final line, elimination of the costs of PMI should be included.

    Other than that it is a superb template to help us transform the historical abandonment of Workforce Housing in Davis into a positive initiative that contributes to the economic and quality-of-life sustainability of our community.

  148. Don Shor

    Thank you, those figures show the range and variables very well.

    “7) CMSA annual median household income of $53,789

    9) Range calculation based on 50% to 150% of median household income”

    When the city is assessing a project, it uses a narrower range of 80 – 120% of median household income, which would adjust the tables (I hope this posts clearly):

    5.509,733159,786239,680
    6.001,164152,931229,397
    6.503,121146,497219,745
    7.005,571140,457210,685
    7.508,483134,786202,180
    8.001,827129,462194,192
    8.505,574124,459186,689

    51,164152,931229,397
    109,675159,740239,610
    15 8,978167,182250,774
    20″1,144176,915265,373no PMI

  149. Don Shor

    5.50% 199,733 159,786 239,680
    6.00% 191,164 152,931 229,397
    6.50% 183,121 146,497 219,745
    7.00% 175,571 140,457 210,685
    7.50% 168,483 134,786 202,180
    8.00% 161,827 129,462 194,192
    8.50% 155,574 124,459 186,689

    5% 191,164 152,931 229,397
    10% 199,675 159,740 239,610
    15% 208,978 167,182 250,774
    20% 221,144 176,915 265,373 no PMI

  150. Workforce Housing

    Note – PMI is based on % down payment. It was set at the rate for 5% down and not adjusted in the sensitivity analysis. The purpose of the analysis was to show the magnitude of the trend. The precise effects of the incorrect PMI on the 10% and 15% data points are trivial.

    Note – It is my understanding that first-time home buyers, people with lower asset levels, and/or credit challenges are required to make much higher PMI payments (this is in addition to paying higher interest rates).

    Note – It is my understanding that 5% conforming loans have not been available since late June. That being said, I expect this situation to reverse itself as the housing market and economy recover. The FHA is still making 3.5% loans (with a big upfront PMI payment).

  151. earoberts

    Thanks Workforce Housing. Excellent analysis. It looks to me like $330,000 would be the absolute upper limit of “affordable workforce housing”, and that would be a stretch, bc it would assume the buyer must have a 20% downpayment and earn approx $90,000 a year. Like Don Shor, I am more concerned about those who are earning less, or have less money to put down, which will be the more likely scenario. However, I think this gives a pretty good working model to deduce whether WHR will truly provide “affordable workforce housing”. Very, very informative discussion.

  152. Workforce Housing

    [quote]It looks to me like $330,000 would be the absolute upper limit of “affordable workforce housing”, and that would be a stretch, bc it would assume the buyer must have a 20% downpayment and earn approx $90,000 a year.[/quote]It would also assume that interest rates stay low in the face of the ballooning deficit.

  153. Matt Williams

    I don’t think we should change the way it is handled in the model, but the HOA payments are in part a form of forced savings. As noted the cost of repairs like a new roof are paid for from the accumulated HOA fees. In a non-HOA situation the owner would be responsible for the cash outlay associated with capital maintenance items like a new roof.

  154. Matt Williams

    I don’t think we should change the way it is handled in the model, but the HOA payments are in part a form of forced savings. As noted the cost of repairs like a new roof are paid for from the accumulated HOA fees. In a non-HOA situation the owner would be responsible for the cash outlay associated with capital maintenance items like a new roof.

  155. PRED Old Timer

    Matt,

    A, B, D: none
    C and E: If we are talking about straight across comparibles (price, sqft, possible repairs) then I’d choose a house in Davis because that is where we work. C and E are nice choices but for anyone stretching to purchase their first house they don’t command a premium simply because the extra reserves aren’t there.

    If we were working in Sacramento, then we’d choose a sacramento house. We’d rather have a shorter commute time and have more time to spend with the children. I’d also rather pocket the savings from the reduced fuel bill. I think parents and financial soundness have a bigger effect on children’s sucess then schools.

    I recommend the Two Income Trap by Elizabeth Warren where she discusses people overextending themselves to buy into certain school districts and how that has shaped current day bankruptcy trends. I also heartily recommend reading up on Economical Hardship and the Family Stress Model. Luckily, you have 2 experts on campus.

    When calculating the taxes, often people use the current assessments which with new hosuing is the assessment on vacant land. I know people who were told that value which they used for their affordability model. Then the adjustments hit and they went over 45% DTI. This sort of bait and switch is used commonly by developers to make their homes seem more affordable.

    One thing that seems to escape notice in these discussions is that UCD wages are not strong and haven’t been strong for over a decade. The workforce has been systemically gutted in terms economical viability. This is also true to a lesser extent for the nation. Take a good look at PCI, mediam household income, and mediam family incomes then adjust for inflation. I think there is support to say that we have been in a mild deflationary period from 2000 to 2008 with a real deflationary spiral hitting in 2009 to 2011. That needs to be addressed in any model examining affordable housing.

    One more thing, if you are going to assume that affordable housing requires 20%, then you will need to reduce the price of the homes considerably. Anyone I know that had 60k or more bought a foreclosure for cash. For clues into this sort of pricing rationale, look into “inferior goods” and how they fair against name brands when competing for constrained dollars.

    Now that that cash sale to it’s next logical conclusion. So much for the Davis schools premium since with no mortgage payments they can now afford to send their children anywhere they want and most likely still have the luxury of retaining one parent at home besides. For me, that would be the best possible outcome for every family.

    ps. HOAs also have special assessments. I’ve seen them as high as 10k.

  156. Matt Williams

    PRED Old Timer, thanks for the response. I had to find my original questions, so for those who care to add their responses here they are again.

    A) How much does the Mondavi Center add to the value of a Davis home?

    B) How much does the presence of UCD and all its faculty and staff add?

    C) How much do Davis’ highest quality schools add? (Although I personally don’t agree with this point, one poster said in a prior post that he and his spouse would have to pay private school tuition if they moved away from Davis)

    D) How much does Davis’ superb library add?

    E) How much does Davis’ low crime rate add?

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