Shame: the cost of ownership
Original post made on Apr 2, 2008
Read the full story here Web Link posted Wednesday, April 2, 2008, 9:29 AM
on Apr 2, 2008 at 1:14 pm
My mother, a very low-income single parent raising two kids, bought a BMR condo through the Palo Alto Housing Corporation in the late 70's and we are so grateful for the program. She would not have been able to afford anything at market rate, but because of the program, my sibling and I were able to continue attending Palo Alto schools and living in our home town. Now we are grown, college-educated professionals living in our own homes and able to give back to our community (Palo Alto) and help the mom who worked so hard to support us. Thanks so much, Palo Alto Housing Corp! You helped us stay in the community. My mother, who still lives in her condo, does not resent the fact that her unit has not appreciated at market value because she wants other low-income, struggling families to have a chance to buy, just as she did.
on Apr 2, 2008 at 6:25 pm
I applaud parent's attitude. The mission of Palo Alto's BMR program should be to offer housing at a low cost, not to provide subsidized opportunities for private capital gains. It can continue this mission only by controlling appreciation rates so each BMR unit remains a BMR housing opportunity for its next owner.
on Apr 2, 2008 at 10:33 pm
I came away from the article on BMR housing amazed at the lack of gratitude many of these program beneficiaries express. Poster child Jean Nolan bought a condo in 1993 for $114K when similar ones sold for $250K. If put nothing down and took out a 30-year loan at the 1993 rate of 7%, she would be paying about $750/mos. 15 years later she has paid $135K and can sell her condo at the city-regulated price of $132K. So she lived in a nice condo for 15 years for only $3K! My neighbors who have lived in apartments since the early 90's will walk away with zero dollars in their pocket when they move; the rent went up in smoke.
It's even worse than that; a better calculation of what Nolan should have been paying is what her neighbors who forked over the full freight for their condo spent. At 7%, they've been paying around $1600/mos. Nolan has lived for 15 years in a condo worth $800 more every month than what she has been paying, she will sell and get back every penny but $3K of what she actually spent on her mortgage. This somehow leaves her bitter and the plan is "totally unfair".
Nolan is jealous her neighbors can sell their condos for more than she can get. Of course back in 1993 Nolan could have bought a full-price condo somewhere for $114K and kept all the appreciation for herself, but she didn't realize the market would boom. Nobody did, real estate was flat or even slightly declining from 1990 thru 1997. So she jumped at the chance to live close to work, to send her kids to great schools. Now that in retrospect it turns out she should have bought somewhere else, she wants to have her cake and eat it too.