It’s Hard to Get By on $90,000 a Year

There is something seriously awry in Fairfax County when the local Redevelopment and Housing Authority may provide public housing assistance to a family of four earning $90,300 a year. The supply of affordable housing is so limited that many middle-class families — not just lower-income families, not just working-class families, but middle-income families — cannot afford to live in the county.

Writes Brian McNeill with the Connection Newspapers:

Using 2005 data, [George Mason University] researchers … found that a family earning the median income of $90,000 could afford payments on a house that cost $265,000. Last year, however, only 115 single-family homes sold at that price or less, out of more than 20,000 homes sold, meaning that families below the median income cannot afford to buy a house in the county.

The report’s findings provided the basis for the Housing Authority’s push to change the definition of “moderate income” to mean at or below 100 percent of the median income. Approximately 50 percent of the county’s households could theoretically be eligible for housing assistance under the new proposed definition.

“This is lunacy,” said Housing Commission John C. Kershenstein (Springfield). “It’s one half of the county supporting the other half of the county.”

When the housing marketplace cannot provide shelter affordable by families earning the media income, then the housing marketplace is seriously broken. Restrictive zoning and planning policies of Fairfax and neighboring jurisdictions have created an artificial shortage of housing and, thus, a massive transfer of wealth to homeowners from non-homeowners. Homeowners reap massive equity increases in the value of their dwellings while non-homeowners find themselves locked out of the housing market unless they are willing to commute horrendous distances along increasingly congested roads from more affordable communities.

Replicated in New Urban Regions across the country, this government-engineered transfer of wealth is unprecedented in size and scope — yet almost invisible in the sense that the public does not understand what is happening.

(Hat tip to Tobias Jodter and Joe West both for pointing out this story.)

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16 responses to “It’s Hard to Get By on $90,000 a Year”

  1. Tobias Jodter Avatar
    Tobias Jodter

    Our place of business near Dulles Airport is a microcosm of what is happening on a larger scale in NOVA.

    We have a few of what the WP refers to as “super commuters” and as I had mentioned one of them – a native Virginian – has become so fed up with his commute from his mini-estate in southern Fauquier that he is re-locating to Georgia (and I might add it was the developments around 50/15/66 since 2003 that were the tipping point).

    The lower paid employees absolutely cannot afford to rent or own anything near Fairfax County. There have been a few relocations into West Virginia and yes – they are clogging their way through Loudoun to get to the eastern side. And it’s a god-awful commute.

    Another common option is illegal multiple families piling in one house. Or like my own next door neighbors here in Centreville – there are 8 (well, we think it’s 8) single young gentleman from Bangladesh (here on H1-B visa’s) living in one house. Some Indian dude bought it as an investment and apparently rents it to all (literally) comers.

    I really feel for some of our younger employees (late 20’s/early 30’s) that are just getting married and starting families. 2 people both earning 50K/year should be able to afford to buy something in Fairfax or eastern Loudoun but they simply can’t. And they are not going to be able to afford the new Dulles South homes that Greenvest wants to build either.

    No cares for my solution but maybe we need to cut down on immigration so there are fewer people moving here rather than just increasing housing density.

    The good news for me I guess is that since my wife doesn’t work, we would technically qualify for government housing assistance!

  2. Anonymous Avatar

    Housing prices in NOVA are absurd, that much is for sure.

    However, I’ve said it here once, and I will say it again – the housing market in NOVA in crashing mainly due to the things tobias jodter mentioned above.

    Like Mr. T said, “I pitty the fool”.

    Well, I do too, and in this case it’s anyone who bought a place in NOVA during the last last 3 years.

    It will be years before these folks will be able to make any profit via their home.

    The biggest reason for this is because inventory is high (11,000+ houses for sale in Loudoun alone) and builders keep building new ones….and more are in the works (think Greenvest).

    The same townhouse you paid $600,000 for last spring is now selling brand new from a builder for $500,000-$550,000, maybe less.

    $1,000,000 dollar houses last spring are now selling for 800K….people lost $3,800 a week this past year on their McMansions.

    There is only one sensible thing to do in NOVA at this point and that’s rent.

  3. Ray Hyde Avatar
    Ray Hyde

    I don’t think it is all that simple. Even if you opened the gates to any kind of construction in Fairfax it would still cost more to live there. Otherwise, I agree with Jim, restrictive zoning is wreaking havoc on the market. When I built my house in Fairfax it took two years to get a building permit, and that was for a lot that already had water and sewer. How crazy is that?

    From the County’s standpoint, it may not be crazy at all, because schools are the big hidden cost, but my home has never had a child live in it. At least Fairfax can’t complain about roads, in that department they must be nearly built out by now.

    The house is now assessed at more than five times what it cost to build it in 1989. Today, the annual rent is more than half of what the house cost to build. Before long, you won’t even be able to afford to rent it, let alone buy. Yet, when it went vacant recently, a new pair TWINKS snapped it up in a matter of days. The reason? It wasn’t a town house or a condo: it has lots of land.

    What we are doing now is truly insane. On one hand we see proffers well north of $100,000 just to get permission to build, and on the other hand we see “inclusive zoning” regulations that require builders to provide affordable housing for some — and charge the cost to the others.

    I think we are overplaying our hand on supercommuters. Yes, there are such people, but I virtually gurantee each of them has a plan in mind. I have neighbors who are “near retirees”, and they put up with their commute because they know it will be over soon.

    I was a supercommuter for a while – as long as it took me to find a better paying job closer to home. I suspect that many others who live in far flung places are biding their time until the next big job center opens up. Prince William County was a far out bedroom community for years, and now it has the fastest job growth in the area. Judging from the massive construction of industrial parks in Manassas, it won’t be long before people in southern Fauquier have a lot more choices.

    Of course, one of those choices will still be to move to someplace even more far-flung, like Georgia. We have heard a number of anecdotal stories on this blog of people moving out, and sometimes taking their business with them. Apparently, they have decided there are better choices elsewhere. I know of a woman who had a place in southern Fauquier who was so upset over the pollution from a new Dominion power plant down there that she sold the place and moved. I imagine she would be equally upset if she turned on the lights one day, and there weren’t any.

    Houses and power plants and landfills, and job centers have to go someplace. Roads especially have to go someplace. If you build someplace and don’t build the roads, then where are you? You can’t even say, “Well, I’m off of exit 31.”

    Now consider the situation at Fort Belvoir. The Army has decided to put all the new construction at the Engineer proving grounds. The reason given is that it is less expensive to build new, than to reconstruct the old base.

    We need new places. QED.

    Fairfax officials are incensed. They had thought the area would make a nice park. Did they offer to buy the “park” from the Army? No. So there you have it. We want open land, we want affordable housing, and we are opposed to any kind of building anyplace, but if we must have it, we want it on the cheap. And we continue to ship stuff hundreds of miles to the dump we don’t want next door by the ton.

    This is a recipe for failure.

    And, I’m sorry, but immigrants are only a few percent of the population. If we had zero immigration tomorrow, then we would still be faced with the same problems we have today. What are we complaining about? Eight well educated gentlemen from Bangladesh? When was the last time you invited them over for a Bangladeshi barbeque?

    So, here’s the deal. Conservation is expensive. If you don’t think so, just try to imagine how much Central Park, or the National Mall is worth. No one is suggesting we sell them off for affordable housing. If you want big open spaces that the people can use, then the people are going to have to pay for them, and it is going to decrease overall density. It is going to increase the need for personal transit and decrease the viability of public transit. Otherwise, you will have big open spaces that no one can enjoy, except the owners. Consider the Montgomery County “Agricultural Preserve”, the Prince William County “Rural Crescent”, or all of Fauquier County outside of the “Service Areas”.

    Here we have a situation where “affordable housing” for half the population is going to result in less affordable housing for the other half. Pretty soon, this will mean that affordable housing for two thirds of the population will mean less affordable housing for the richest one-third.

    Now, what was it you were saying about wealth transfer?

  4. Toomanytaxes Avatar

    How much of this problem can be expected to be corrected without a new government program simply as a result of rising interest rates? I suspect, without knowing, that there has been a strong correlation to the rapid rise in housing prices in this and other areas to the extremely low interest rates that were in effect in the U.S. to help stimulate the economy after 9/11. If so, shouldn’t the opposite effect be occurring as interest rates rise?

    This is never going to be a cheap place to live or work, but the economically absurd relationship between housing prices and incomes might become less absurd.

    Of course, as others pointed out, any such adjustment will not come without real pain to many people, especially those who purchased homes (and big homes) over the last few years. I also suspect that some people within the real estate and construction industries might share in this pain as well.

    I’d guess that the financial gurus in local governments have thought long and hard about this for sometime as they must soon deal with the fallout from the end of the real estate boom and local spending that has been based on that boom. I’ve heard Fairfax County’s CFO, Ed Long (a very sharp guy), talk about this.

    What are the predictions as to NoVA housing prices, both in general and in appropriate sub-segments of the market (e.g, price range, type of home and location)?

  5. tobias jodter Avatar
    tobias jodter

    I disagree on the immigration issue. According to US Census data I mentioned in another thread, 29% of all new residents to VA between 1990-2000 were immigrants. I believe that is understated so it is safe to say 1/3 of all new residents in VA are immigrants and I am sure it is higher for NOVA. If we had had zero immigration between 1990-2000 it could not be said we would be in the same situation.

    I merely would like to see more discussion on why it is in the long-term best interest of the US to push so hard to increase our population so massively. It seems to be a given – the only solution not being considered is fewer people.

  6. Ray Hyde Avatar
    Ray Hyde

    Is that 29% immigrants as in new to Virginia or immigrants as in new to the US?

    The number if illegal aliens has been widely quoted as 12 million. that’s around 4% of 300 million. If they are legal immigrants, then what can Virginia do about telling them where to live?

    We have a big hollow in the demographics between the very young and the old, which is part of our problem with social security. At some level it makes sense to fill that hollow with taxpayers.

    Still, there is a big difference between 4% and 33%. What is the right answer?

  7. Jim Wamsley Avatar
    Jim Wamsley

    “Last year, however, only 115 single-family homes sold at that price or less, out of more than 20,000 homes sold, meaning that families below the median income cannot afford to buy a house in the county.”

    A little more math to go with “the median income of $90,000 could afford payments on a house that cost $265,000.” The land cost should be about 20% of the value of the developed property, so a $1,000,000 an acre property needs to be developed into $5,000,000 worth of houses.

    This gets you two $2,500,000 McMansions or 18 townhouses. How much of Fairfax County is worth $1,000,000 an acre? How much is zoned for 18 or more houses per acre? Is the rest of the zoning in line with the land value?

    How much of the transportation system supports 18 houses or more per acre? How much is the state investing in roads that support low density low value housing, how much of the transportation investment is in line with the land value?

  8. tobias jodter Avatar
    tobias jodter

    That would be 29% of new residents to VA were also new immigrants to the US. I am not suggesting a legal immigrant cannot move anywhere they like. I am suggesting perhaps we need to think about curtailing the numbers rather than increasing them.

    As far as SS is concerned IMO it is a short-term and counterproductive solution to solve this via immigration. Not to mention US businesses are also busy outsourcing jobs overseas reducing the number of taxpayers in the US.

  9. Ray Hyde Avatar

    If that is correct it is an amzing number. What is the source?

  10. Ray Hyde Avatar

    Jim, I’m not following you.

    My one acre is assessed at around 180,000. So around my neighborhood 20% of 265,000 gets you a quarter of an acre, if you can find it. What it doesn’t get you is permission to build on that quarter acre. Then you would still have to be able to put up the house for $210,000.

    That is still pretty easy to do in many places, but not in Fairfax. I did it on a fraction of my salary 15 years ago, but I couldn’t begin to do it today.

    How much of Fairfax is valued at a million an acre? How much of the transit system is set up for 18 homes per acre, let alone a hundred homes per acre. How much of the zoning is set up for 18 homes per acre? Why does the zoning need to be in line with the land value? (Please be sure to explain this to the Fauquier Supervisors.)

    It seems to me that the prices are what they are. We can either pay people enough so they can afford the prices (and make ourselves less competitive business wise) or else people will choose not to come. We have had that happen several times in my office.

    I said in another post that housing is a resource that business requires in order to gain access to employees. That being the case, maybe it is appropriate that businesses pay much of the freight in taxes. This helps keep housing costs low.

    Instead, the (bogus) argument is then made that housing doesn’t pay its own way, and therefore shouldn’t be allowed, because new housing passes increased costs on to existing owners. This argument leads to reduced housing permits and higher housing costs, which in turn negates the value of having business pay an undue share. This argument also leads to a capital gain for existing owners, so it is a self serving argument.

    Jim Bacon is right. The restrictive zoning practices HAVE led to a shortage in housing. Part of what he and Stuart Schwartz and others have cited as increased demand for high density housing is artificially created demand, because there is none other available. It is going to create unprecedented wealth transfer not only to existing owners, but to that special class of owners who manage to get permission to build high density housing.

    And that is AFTER we build them a Metro stop.

    I’d be happy to sell half of my acre lot, but I’m not allowed to. Now, if only I could get them to give me a Metro Station…….

  11. Anonymous Avatar

    The growth due to immigration is if anything understated because children born to immigrants – legal or illegal – are counted as native born citizens.

    BTW, the single largest source of legal immigration is family reunification. An immigrant is more likely to get into the US simply by being kin to someone already here than by being a brilliant scientist.

    If the current Senate proposal to “normalize” the illegal immigrants now in the US becomes law, these immigrants will be able to bring their immediate families into the US right away. Naturally they will be settling in the areas where immigration has already had a huge impact. This is estimated to add between 4 and 5 million people to the US, most of which will be minor children. It will probably be higher because some estimates of the number of illegal immigrants in the US go to over 20 million, and there is no cap on immediate family reunification.

    Where’s the housing for this increase and what impact will this increase have on schools? Some NoVA schools can’t even plan efficiently now because they have no firm idea how many students will be attending in any given grade.

    The astonishing thing to me on the whole Senate debate on the immigration bill (S 2611) was that the proponents didn’t have a clue as to how much of an increase in population this measure would force on the US. And once done, it’s DONE. You can’t repeal people.

    Most problems discussed on Bacon’s Rebellion come down to too many people. Period.

  12. Toomanytaxes Avatar

    Re Immigration – FCPS officials have indicated that one of its cost-drivers is the larger number of children being born to immigrant families that causes increases in ESOL enrollment, along with special programs designed for low-income children. FCPS states that it does not have data splitting these children between families that are here legally and those that are not. But as 3:38 stated, under US law, a child born here is a citizen regardless of how her or his parents came here.

  13. Anonymous Avatar

    Exactly, toomanytaxes. And remember that when costs vs benefits of immigration are totaled up, children born in the US are not counted as costs – they’re US citizens, not immigrants.

    Last week the “LA Times” ran a story about a family in Los Angeles with 10 children: 3 teenaged daughters, one set of 3-year-old triplets, and a brand new set of quads. The parents were both in the country illegally and neither spoke English in spite of being in the US for over 20 years. The triplets were born after the mother took some “fertility drug” brought in from Mexico and one of them was born with a brain abnormality causing him to need 3 surgeries and to spend most of his 3 years in the hospital. The father makes $400 a week installing carpet and they all live in a 1BR apartment. The costs of welfare, schooling, and health care for these 10 children has to be astronomical; however, none of these costs will appear on any study regarding the costs of immigration: All 10 children are US citizens – they were been born in California. All costs will be attributed to US citizens. That’s us.

    I relate this little story not because it’s typical; it certainly isn’t and I’m not suggesting it is. I relate it to show how little you can trust statistics regarding costs of immigration, such as the recent study that declared that, all things considered, illegal immigrants actually didn’t use that much free and subsidized health care – compared to US CITIZENS. Now you know why…..

  14. Anonymous Avatar

    How about this for some eye-popping numbers, also from FAIR using Census Data:

    County Factsheet: Fairfax County, Virginia

    Summary County Data (and Source)
    Population (2003 CB est.): 1,000,405

    Population (2000 Census): 969,749

    Foreign-born Population (2000 Census): 237,677

    Share Foreign Born (2000): 24.5%

    Immigrant Settlement 1991-98 (INS): 55,320

    Population Projection 2025 (FAIR): 1,482,000

    Keep in mind that the foreign born population doesn’t include children born in the US so well over 25% of Fairfax County is immigrants and their US born children.

  15. Anonymous Avatar

    The California trend of using electric carts and cars to tackle the global warming and pollution problems comes at a great time for the public to resist the latest $4 a gallon gas planned for America this summer. Revolution indeed.

    Together with postal workers who could use this, and municipal employees, it would be a great savings to begin such a trend throughout the nation and to see what clean air might be possible through encouraging the trend.

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