If voted to power, home loan EMIs would become cheaper than house rent

After Reserve Bank of India’s (RBI) interest rate cut yesterday, Finance Minister Arun Jaitley said government wants to further reduce the burden of interest rates on the common man to a level where paying equated monthly installments (EMIs) for home loans will be cheaper than paying house rents.

Speaking at an industry event yesterday, Jaitley said the Narendra Modi government has not increased tax rates in the last five years, but has still been able to double the tax base and increa ..

aitley said the Narendra Modi government has not increased tax rates in the last five years, but has still been able to double the tax base and increase tax collection. He said, if voted to power, the government would pursue policies to enable further reduction in interest rates and also continue with fiscal consolidation.

“Low interest rates will make borrowings cheaper, particularly for homebuyers, and boost consumer demand that will boost economic growth,” Jaitley also said in an interview to Hindustan Times.

Giving an example of previous NDA government under former Prime Minister Atal Bihari Vajpayee, Jaitley claimed that When Vajpayee was the prime minister, home loans had become so cheap that EMIs were less than renting a house. “I think that’s where we need to take interest rates,” he added

Atal Bihari Vajpayee government had introduced income tax deductions in lieu of interest payments on home loans, which lowered the cost of borrowing and boosted that housing sector.

He said that the Modi government have consciously tried to strengthen India’s middle class. With every budget, the government has tried to increase the spending capacity of middle-class by liberating it from taxes. “We brought indirect taxes – GST [Goods and Services Tax] down. For housing , we have brought down to negligible level,” he added.

“The future of the Indian economy is the middle class and the neo-middle class and today’s poor should eventually become a part of that,” Jaitley said.

Source: Economic Times India

Developers everywhere, yet housing gap persists

Translating the large number of real estate developers in Nigeria to a more affordable housing for the citizens is almost the same as pouring water from a big tanker into an empty basket.

Checks has therefore, revealed that there are a lot of challenges that cut short the large number of developers from bridging the housing gap which has remained above 17 million units in the last 10 years.

Lack of infrastructure, regulatory framework on the part of the government, low income on the part of the end users, and unavailability of affordable capital for developers were some of the issues noted by stakeholders.

Rotimi Akindipe, an Architect and MD/CEO of Groveworld Realties Limited, a real estate development company in Lagos, said the housing solutions Nigerian developers have are unaffordable to most buyers.

“There is a glut in the kind of houses that are delivered to Nigerians, especially first time homes buyers, who, naturally, are the people that need these houses. First and foremost, the houses are not cheap, but they have to be affordable; the places they are located do not help commuting to their place of work,” Akindipe told us.

Checks revealed that the increasing young adult population who are just starting their career in urban cities coupled with those whose income level were affected by the 5-quarter recession are now settling for one-room self-contained as a result of dampened purchasing power. They are the ones driving the demand for such properties.

Therefore, the average rate per month at which single room self-contained apartments are rented increased by 24.16 percentage points from 42 percent in 2017 to 66.16 percent in 2018, survey shows.

To that effect, Godwin Asuelimen, Head, Core Product at Propertypro.ng, said the demand for housing is mostly for the low priced properties. “For leasing, the studio room properties are the hot cake in the market, but developers want to get back their investment on time and, as such, they mostly focus on building 2 or 3-bedroom apartments,” he said.

He added that what is on offer is too expensive for the large segment of the middle and low income earners, noting that even single rooms, sometimes, are beyond their budget, especially when the property is located in a highbrow reveals that it is more expensive to construct a building in Nigeria than it is in most of Africa. Bankole Folorunsho, Deputy Managing Director, Stable Shelters Development Co. Limited, a real estate firm, says there is supposed to be a regulatory body for prices of land in Lagos, for example, as many people see lack of regulation as an opportunity to sell at high price.

“This is one of the factors that is driving cost of houses and translates to why real estate developers have not been able to bridge the housing gap,” Folorunsho told us.

His submission was affirmed by Asuelimen who emphasized, “it is very important that government plays a regulatory role in the real estate sector.”

Akindipe noted that “government’s influence is not really felt in the real estate sector; you can’t have large size of land where you can setup divisions like they do abroad, where you can build 100 houses.”

Meanwhile, credit sales reports that the average rent of Nigerians between 20-35 years of age is around $230 monthly and the average price of one-bedroom in mega cities like Lagos, Abuja and Port Harcourt is around $300 per month.

Folorunsho explained that even getting land documentation and building approval also contribute to the high cost of real estate properties, saying, “the guy that is going to push your documentation file is not going to do that except you give him something.”

On the solution that can help translate the large number of developers into affordable accommodation for Nigerians, Akindipe said Nigeria has to, first and foremost, upgrade its infrastructure because “housing is a subset of infrastructure.”

Folorunsho explained that a developer in Nigeria, gets his own light, supplies water treatment facility and builds good road network. This, according to him, is supposed to be done by the government. “For instance, in some parts of Lagos Island, you need to drill an industrial borehole before you get good water and upon that you would still have to treat it; those things don’t come cheap.”

“As far as government is not providing those social amenities, the end users are going to be bearing the cost of those things when they are buying real estate properties; this means construction cost will remain high”, he added.

Source: By Endurance Okafor

Unlocking New Opportunities for Affordable Housing in East Africa

Kenya to host, East Africa’s leading property summit, featuring international expertise on affordable housing solutions. Representing an innovative and sustainable approach to affordable housing, EchoStone will share its experience from their current project in West Africa with the East African region.

Next week, at the East Africa Property Investment Summit (EAPI), Kenya will unite citizens, government entities, local and foreign investors, and development partners with property interests across East Africa. America-based, EchoStone has been selected to present their affordable housing innovations currently being deployed in West Africa.
Currently earmarked to develop more than 200,000 homes in Lagos, Nigeria, EchoStone came to regional attention after delivering a two-bedroom unit in just 14 days. Kenya, specifically, has chosen to address the crisis of global housing through the Big 4 initiative, launched by President Uhuru Kenyatta in 2018. The plan is designed to accelerate the development of affordable housing; along with manufacturing, food security, and universal healthcare – over the next 5 years.

“Our invitation to present at EAPI, highlights the need for innovation in the market especially with regard to the global housing shortage,” says Anders Lindquist, Co-Founder and Chief Business Development Officer of EchoStone.

According to World Bank, Kenya has a production target of “200,000 housing units annually for all income levels. However, the production of housing units is currently at less than 50,000 units annually, well below the target number, culminating in a housing deficit of over 2 million units, with nearly 61% of urban households living in slums.”

EchoStone’s focus is to create affordable and sustainable housing for low and middle-income communities in high impact markets like Kenya. EchoStone has created a solution that satisfies this critical need for rapid development by building at an unprecedented rate; through a combination of technology, public-private partnerships, and sustainable development practices – certified by the International Finance Corporation’s Excellence in Design for Greater Efficiencies (IFC EDGE).

“We’re making history,” says Anthony Recchia, EchoStone Co-Founder and CEO. “We constructed the first IFC EDGE certified house in Nigeria, a 64munit, in just 14 days. This project represents Echostone’s commitment to helping governments around the world deliver high-quality housing and affordability to their citizens. The growth potential of our system is making the improbable, possible – that’s why we’re sharing our story at EAPI.”

The affordable housing “deficit continues to rise due to fundamental constraints on both the demand and supply side and is exacerbated by an urbanization rate of 4.4%, equivalent to 0.5 million new city dwellers every year,” cites World Bank.

The EchoStone Housing System is the missing link between government, development, financing, off-take, and the industrial scale of building houses. Through their sophisticated approach, EchoStone delivers high-quality construction, rapid development, and streamlined operations that ultimately offer stakeholders a greater long-term value for their investment.

“By designing and constructing our communities with international sustainability standards and alignment to the United Nation’s Sustainable Development Goals, EchoStone significantly reduces the projects’ embodied carbon footprint, as well as its lifecycle use of energy and water,” says Emmanuel Stefanakis, Chief Sustainability & Development Officer at EchoStone. Therefore, homebuyers can expect lower utility costs and less long-term maintenance than with traditionally constructed houses.

Source: Prnewswire

Why affordable housing remains one of the basic rights for every Kenyan

“It is hard to argue that housing is not a fundamental human need. Decent, affordable housing should be a basic right for everybody in this country. The reason is simple: without stable shelter, everything else falls apart”: Matthew Desmond, Harvard sociologist.

This demonstrates why the Affordable Housing, part of President Uhuru Kenyatta’s Big Four agenda is key to his legacy. This is not to say that we should ignore the other aspects of the Big Four agenda: manufacturing, universal health coverage, food and nutrition. Let me share my views on the ambitious Affordable Housing Programme (AHP).Affordable housing is a key pillar in the economic development of any country as it guarantees its citizens an improved standard of living.

The project delivery and finance framework overview released by the Government on AHP outlines four levels of housing types, but only three are under focus in the programme. The middle to high income range will cater for Kenyans earning between Sh50,000 and Sh99,000.

Under the affordable housing plan, a bedsitter will cost a maximum of Sh800,000 to purchase and Sh1 million for a two-bedroom while a three-bedroom unit will cost Sh2 million. The first lot covered in the 2017/18 financial year includes Park Road (1,640 units), Makongeni (20,000 units), Shauri Moyo (5,300 units), Starehe (3,500 units), Mavoko (5,500 units), Social Housing (15,000 units), counties (48,000 units) and Nairobi County (67,8000 units).

The planet

However, it looks like the only challenge facing this ambitious programme is the financing model, which has not taken into consideration the interests of workers in the informal sector, but I believe this will be addressed by the social housing component in the project where a monthly rent equals a mortgage payment.

Decent housing is among the key planks captured by the 17 Sustainable Development Goals (SDGs), otherwise known as the Millenium Development Goals that are a universal call to action to end poverty, protect and ensure that all people enjoy peace and prosperity.It has to be noted that millions of Kenyans today live in informal settlements popularly known as slums that are without easy access to safe water, sanitation and healthcare.

The World Bank projects that Kenya needs more than two million low income houses, and building them would boost its economic growth.The World Bank’s Kenya Economic Update: Housing-Unavailable and Unaffordable report shows that the production of housing units is currently at less than 50,000 units annually, well below the target number; culminating in a housing deficit of over 2 million units, with nearly 61 per cent of urban households living in slums.

 

The report adds that this deficit continues to rise due to fundamental constraints on both the demand and supply side and is exacerbated by an urbanisation rate of 4.4 per cent, equivalent to 0.5 million new city dwellers every year.

Higher risk

This kind of outlook in a very crucial sector like housing is not impressive for this country and that is why efforts by President Uhuru Kenyatta to increase the number of affordable houses across the country, through the Big Four agenda, need the support of every Kenyan.Under AHP is the proposed Housing Fund which is the lynchpin in the delivery of affordable houses in the country and will play a critical role in bridging the gap between the supply of affordable housing by private developers and the demand of housing by low and middle-class Kenyans.

The Fund will also provide affordable long-term financing to homeowners through a Nationwide Tenant Purchase Scheme (“TPS”) and will allow low and middle-income Kenyans to save towards the purchase of an affordable home via a national Home Ownership Savings Plan (“HOSP”).

Studies show that in 2012, about two million Kenyans were homeless and the number is steadily increasing by about 200,000 Kenyans per year and shows that about 68 per cent of all Kenyans do not own land and have a higher risk of contracting infections and diseases.It is clear that affordable housing aims to reduce construction costs, unlock land for development and grow the mortgage finance market.

Investors will be encouraged to invest as government support gives them more assurance in putting their resources behind the low-cost housing projects.A lot of benefits are going to accrue from the affordable housing programme, among them the creation of job opportunities to the youth alongside the boost it will have on the construction industry.Bodies like Board of Registration of Architects and Quantity Surveyors (Boraqs), Architectural Association of Kenya (AAK), Engineers Board of Kenya and the National Construction Authority will have to train and accredit more professionals to deal with the increased workload.

Source: Mr Mulyungi is Mwingi West Constituency Member of Parliament and former PS housing

Affordable Housing Crisis Spreads Throughout World

Cities around the world, from New York to London to Stockholm to Sydney, are struggling to solve growing affordable housing crises.

Acute shortages are persisting despite millions of dollars invested and hundreds of thousands of units built. Some countries have focused on solutions promoting unshackled free markets while others have turned more to rent control and subsidies.

But no approach has solved the crises and most have other negative ripple effects.

Across 32 major cities around the world, real home prices on average grew 24% over the last five years, while average real income grew by only 8% over the same period, according to Knight Frank, a London-based real-estate consulting firm.

Economists say it is striking that affordability has worsened even during a period of global prosperity over the last six years. But income growth has been unable to keep pace with a rapid run-up in home prices.

Inflation-adjusted home-price gains have outpaced income growth over the last five years in 18 out of 25 world cities in the Knight Frank report. In two other places—Dubai and São Paulo—real incomes have fallen more than home prices, creating similar challenges.

Migration patterns have been partly to blame. Cities have thrived over the last decade, as jobs and people have migrated back downtown from far-flung suburbs.

“Global cities are suffering from affordability issues, partially as a result of their own success,” said Liam Bailey, global head of research at Knight Frank.

Soaring prices are also being fueled by increasing demand from investors. These have included domestic “mom-and-pop” investors buying second homes and foreign investors taking advantage of new technologies and an increasingly globalized financial system.

Governments haven’t had the money to subsidize new supply. Most budgets are strained by an aging population with growing pension and health-care needs.

The private sector has also fallen short. In numerous hard hit cities, developers have built hundreds of thousands of units but most of them are priced at upscale buyers and renters, not the middle and working class people who are being priced out of the market.

Tokyo is one of the few cities in which supply has kept up with demand, keeping a crisis from developing. But that is due largely to deregulated housing policies that other countries would have a hard time reproducing.

“It goes against the notion of planning and developing cities in an orderly fashion,” said Laurence Troy, research fellow at the City Futures Research Centre of the University of New South Wales, Australia.

To keep a lid on prices, governments in some countries, including Canada and Australia, have added taxes aimed at curbing purchases by investors or foreigners. Buying by Chinese investors, who have been particularly active during most of the decade, has declined because of recent capital controls in that country.

These trends, coupled with a glut of luxury supply, have damped prices in some of the frothiest markets. In Sydney, the median house price at the end of last year was about $1.1 million Australian dollars ($780,000 U.S.), down about 11.3% from the peak hit in 2017, according to CBRE Group Inc.

A few years ago, prices in Vancouver and Toronto were growing by up to 30% annually. But today they’re virtually flat, thanks in part to a steep sales tax aimed at foreign buyers and tightened rules to make it more difficult for families to qualify for mortgages.

“Basically what we are doing now is we are undoing crazy years,” said Benjamin Tal, deputy chief economist at CIBC World Markets Inc.

Still, while these markets have cooled, prices are unaffordable to middle-class families. In Sydney, they’re still about 12 times the median income, compared with eight to 10 in markets where prices are considered more affordable. “When you’ve gone up 90% and you come down 10%, you’re still up 80%,” said Bradley Speers, head of research for CBRE’s Australia business.

The public and private sectors are searching for new solutions. Cities such as London and New York have rezoned swaths of land to allow for more high-rise construction or relaxed rules to allow for smaller unit sizes.

Architecture and construction firms are trying out new construction techniques made possible by advances in technology. For example, U.K. architecture firm Rogers Stirk Harbour + Partners is looking at ways to expand to the suburbs the modular construction techniques it pioneered with its pilot Y:Cube development.

“A lot of the neighbors looked at these and asked where they could get one in their backyard for their parents,” said Ivan Harbour, senior partner with the firm.

Meanwhile, housing is becoming an increasingly charged political issue, with proposals to expand rent control cropping up in places such as California, Germany and London.

Affordable housing has also become a big issue in the coming Australian election, with the Labor Party advocating measures intended to boost new supply and reduce speculation. Opponents of these measures warn that they could send the softening market further into a tailspin.

In Sweden, Stefan Löfven was able to eke out reelection as prime minister earlier this year but only after agreeing to numerous policies of other parties including one involving deregulating rents for tenants in newly constructed buildings, to encourage new supply. But many don’t expect any action soon because the government coalition is tenuous.

“Given the government we have in place, it unfortunately looks like it could be another four years without anything really happening,” said Albin Sandberg, an analyst with Kepler Cheuvreux, a financial-services firm.

Source: Laura Kusisto, Peter Grant

Can California Solve Its Affordable Housing Crisis?

California is among the top destinations for high-tech workers, who earn among the highest incomes in the country. Those who already own homes in the state, especially in San Francisco’s tony Bay Area, are the envy of their peers elsewhere. Even so, California’s new governor, Gavin Newsom, sees a growing “homeless epidemic” haunting middle-income workers and single-income households in the state, for whom both home ownership and renting are unaffordable. The median price of a home in the state was $570,000 last year, up 6% from 2017, and set to rise further, according to a forecast by the California Association of Realtors.

Newsom wants to make way for 3.5 million affordable new homes by 2025, and has incorporated proposals to achieve that in his budget earlier this month. Standing in the way of more affordable housing in California are 40-year-old laws that discourage home sales and encourage higher rents; restrictive urban planning policies that curtail land supply; and old mindsets that resist change, according to experts at Wharton and the University of San Francisco.

Susan M. Wachter, Wharton professor of real estate and finance, noted that in many cases, it is not possible for one breadwinner to shoulder the cost of housing in California. “It takes often several members of the family working to afford what would be minimally adequate elsewhere in terms of rental housing,” she said. “What’s particularly hard is, elsewhere, the family formation period is often one of homeownership where you then can have stability and be protected against rent increases. But getting on that homeownership ladder is very difficult if rents are high. You can’t save.” Wachter is also co-director of the Penn Institute for Urban Research.

The problem of housing affordability in the state has existed since the times of the Gold Rush in the mid-1800s, said William (Billy) Riggs, assistant professor in the School of Management at the University of San Francisco. Policy makers, businesses, public entities and other stakeholders have to address the housing affordability problem not only for California, but also for other states and cities that could face the same situation in future, he said. “It may be Austin, Chicago or Nashville that we’re talking about next in terms of gentrification and pressures on job growth.”

Wharton professor of real estate Todd Sinai called for “a holistic approach” to the housing affordability problem in California that takes care of the needs of future generations as well. “Even if you solve the housing problem in the immediate short term, five years from now the growth in the number of people who are going to need jobs in California will again present a problem,” he noted.

A holistic approach would focus on not just making land available for the housing needs of a higher-density workforce, but also an integrated transportation infrastructure, Sinai explained. “One of the issues is that the real estate is more expensive in the places where the jobs are, and the commutes in California to get there take so long that people can’t spread out. And that is a transportation issue. The way to make more land available is to have easier access to get from those places into the cities where the jobs are.”

“Getting on that homeownership ladder is very difficult if rents are high. You can’t save.”–Susan M. Wachter

Wachter, Riggs and Sinai discussed the ways out of California’s housing crisis on the Knowledge@Wharton radio show on SiriusXM. (Listen to the podcast at the top of this page.)

Increasing Housing Supply

Newsom is focusing primarily on increasing housing supply, where he is working with mayors to make way for new construction with the requisite financing. “We’re seeing a theme of partnerships across sectors whether it is public, private or philanthropic,” said Riggs.

Riggs expected builders to “be open” to Newsom’s efforts. “We’re seeing an openness to engage in that type of dialogue,” he noted. Builders have been experimenting with modular and prefab units that can be constructed relatively faster, and also different house types to suit the needs of changing family structures, he added.

Wachter called for partnerships that bring new types of housing that is modular, high-density, and near transit. She said that those approaches are “the way forward,” but wondered if it is possible to scale them, and especially in the places with the greatest need. Such housing needs to be near more markets that have job opportunities, she added.

The pent-up demand for housing in California is exacerbating the problem. “The difficulty California faces is that the overhang of excess demand to live there is so large that the scale you would need to make a real dent in this is quite high,” said Sinai. One way to solve that problem is to have better technologies that allow developers to build at a cheaper cost, he added. Doing so would mean higher profits for developers rather than lower prices for residents, “unless you really move the needle on supply or if you do controls on the rent that can be charged,” he added.

Threading the Needle

Affordable rental housing in the right places is not easy to achieve, Riggs noted. “Part of the issue is [having] housing in the right location, and it’s difficult to thread this needle in a way that gives a supply bump that is needed.”

Renting a home at affordable rates is also difficult in California because several factors constrain availability and drive up rents. For one, “there’s no incentive right now for builders to build rental stock,” said Riggs. He noted that a typical studio or a one-bedroom apartment would rent for between $3,000 and $5,000 monthly, which would be beyond the reach of middle-income workers or single-income families.

Riggs also pointed to what he called “the elephant in the room” — a 1978 state law called Proposition 13 that caps property taxes at 1% and increases in assessment values at 2% a year between two sales of a property. That has a “lock-in effect,” discouraging sales of owner-occupied homes, according to a research paper published by the National Bureau of Economic Research. “The large effect of Proposition 13 on renters’ tenure is particularly striking and suggests that longer tenure by owner-occupiers forces younger households to delay their transition from renting to owning,” the paper’s author wrote.

“It may be Austin, Chicago or Nashville that we’re talking about next in terms of gentrification and pressures on job growth.”–William Riggs

Riggs said that because Proposition 13 has fixed property taxes for many for many generations since 1978, it has “created great wealth disparity and generational wealth disparity.” That would be one challenge for Newsom, and already, efforts are underway to dismantle it and allow the state to earn more tax revenues.

A third obstacle to building affordable rental housing is the availability of land. “Where is the land?” Wachter asked. “How do [builders] get into the market at a price point that’s affordable?”

Will Higher Wages Help?

One way to tackle the affordability issue is with higher wages for employees in the state, Sinai suggested. “The people who can afford to live in California are those who either have a lot of money or who are willing to work a tremendous amount to earn a lot, just to be able to be there, or people who are willing to spend a larger fraction of their income in order to be there,” he said.

However, higher wages could be counterproductive in addressing the affordability problem. “We have to be cautious with that lever,” said Riggs. He cited case studies which showed that higher wages have caused home prices to rise.

A Partnership Approach

Riggs suggested “creative uses” of land controlled by public entities such as parking lots, school district sites and underutilized inner city lots to make way for a “wide-scale building boom.” Wachter backed Riggs’ idea of finding new uses for publicly owned lands. “Public entities are aligned in terms of incentives for getting this done,” she said. However, Riggs pointed also to “fragmentation” in the ownership of lands as an obstacle in freeing up sites for development.

As mayors in the state explore those and other ways to increase the supply of land for housing with the requisite approvals, Wachter reiterated that they must be able to do so at scale to have a meaningful impact. And for that to happen, they must secure the support of their constituents. “Behind all of this is [the question]: Are constituents supportive?” Wachter said. “There will need to be change along many lines to solve this problem in a holistic way.”

“The overhang of excess demand to live [in California] is so large that the scale you would need to make a real dent in this is quite high.”–Todd Sinai

How Businesses Could Help

Businesses in the state are also eager to try and do what they can to solve the housing affordability problem, Riggs noted. Companies like Genentech, Google and Facebook are among those that are “willing to contribute to [solving] this issue” and partner with the state in its efforts, he said.

Companies don’t want the housing problem to make it difficult for them to find talent and therefore be compelled to move out of the state. “The Bay Area companies really want to stay here,” Riggs said. “They want to see change. They want to be able to house particularly some of their service employees, and some of their junior employees.”

According to Sinai, companies could play a significant role in facilitating “truly affordable workforce housing” because it benefits them. “To a degree, companies historically have provided affordable housing for their employees,” he added. “Nothing is keeping a firm in San Francisco from buying land … and making it available for their employees at below-market rates [so they can] afford to live in a good location.” Wachter added that companies could also use such lands they may buy to provide transit infrastructure.

Averting a National Crisis

More broadly, Wachter saw a role for the federal government, too, in helping California solve its housing problems. “There needs to be a federal answer as well,” she said. “There needs to be encouragement to produce affordable workforce housing. There has to be an emphasis on that throughout the nation, connected to transit. California is an outlier, but it’s also a harbinger here.” Policy makers and builders in other states could learn from the positive steps that California may take, and try to replicate them.

Sinai agreed that affordable housing is “a national issue.” Research has shown that San Francisco, in particular, and California, in general, are “under-housed from an economic perspective,” and that has consequences. “There’s productivity loss in the aggregate economy by not having more affordable housing in those areas.”

Source: knowledge@wharton

Central Florida, worst in nation for affordable housing, gets no housing money in House budget

Orlando is the worst city in America for low-income housing, but it could end up without funding for affordable housing in next year’s state budget.

In a spending plan set to pass the House this week, affordable housing programs would receive $123.6 million, but the money would be steered to areas of the Panhandle damaged or destroyed by Hurricane Michael last year.

Orange CountyOsceola CountySeminole County, is getting crushed by the affordable housing crisis,” said Rep. Carlos Guillermo Smith, D-Orlando, during a House budget panel meeting last week. “I support the money that’s going toward the victims for Hurricane Michael, but it’s a false choice to have to pick between recovery for Hurricane Michael victims and funding affordable housing. We have zero money from affordable housing … for Central Florida. That’s a problem.”

Smith added, though, that negotiations with the Senate still need to take place over the $90 billion budget. Since the Senate’s initial budget has $224 million in affordable housing programs and another $100 million for low-income housing for Michael-ravaged areas, it’s likely the final budget will contain at least some money that could help the Orlando area.

“If you went to every delegation meeting that I was in, it was a priority of every county and every city,” Sen. Travis Hutson, R-St. Augustine, the top Senate economic development budget writer, told the Orlando Sentinel. “And the only way I know how to solve it is to fund it.”

The No.1 economic development budget negotiator for the House, Rep. Jay Trumbull, R-Panama City, did not return a request for comment Monday.

House Speaker Jose Oliva, R-Miami Lakes, has tried to be frugal this year, by keeping his chamber’s spending plan at less than the per capita spending in the current budget, which stands at $88.7 billion.

Even if the final budget contains money for housing outside the Panhandle, with much of the state in dire need of affordable housing, it’s likely some areas still won’t be able to fill their growing needs.

By one measure, Orlando was ranked worst for affordable housing; by another, Miami took the top spot. And pockets of the Panhandle and the Keys are still recovering from storms that in some places wiped out entire communities.

Orlando was ranked worst in the country for low-income earners to find an affordable place to live, in a report released by the National Low Income Housing Coalition earlier this month. For a typical family of four earning $24,600 a year or less, there were 13 affordable rental homes available for every 100 households in need.

More than 12,000 Central Florida households are on a waitlist for affordable housing. That number is expected to grow when 1,000 units in the Lorna Doone Apartments, Ivey Lane Homes, Reeves Terrace, Murchison Terrace Griffin Park and Lake Mann complexes are demolished because the U.S. Department of Housing and Urban Development doesn’t have the money to repair the buildings.

In a study released this month by economists Richard Florida and Steven Pedigo for the Miami Urban Future Initiative, Miami had 53 percent of its renters paying 35 percent or more of their income on rental costs, the highest in the country. Orlando was sixth with 45.6 percent.

In Panama City and other parts of the Panhandle smashed by Michael last year, the recovery is still moving slowly, particularly when it comes to housing.

Source: Orlando Sentinel

Silicon Valley housing shortage worsens for lowest-income earners

Only 22 out of every 100 households in California’s lowest income bracket have access to available and affordable housing, according to the most recent annual report by the National Low Income Housing Coalition.

That means the state’s poorest people can’t find a place to live — something which the report points out is a pattern across the country.

While California has a major shortage of affordable housing, the report shows California is among the worst states with available housing, sharing the bottom of the list with Nevada, Delaware and Oregon.

“The shortages of affordable and available rental homes disappear for households higher up the income ladder,” the report says. “Every state has a shortage of affordable and available rental homes at the very low income threshold of 50% of AMI, 20 states have a shortage of housing at 80% of AMI, and just seven states have a shortage at median income.”

The report shows that California is short 1,019,190 homes for extremely-low income level renters, with more than 76 percent of those at this income level being “households with severe cost burden.” The report says those are individuals at risk of sacrificing things like healthy food and healthcare to pay their rent.

“I think this report illustrates the fact that our housing crisis is most severe for our low income earners and the gap between supply and demand is the greatest when you look at low income housing,” said David Low, spokesman for Destination: Home. “When there is that huge of a gap, it provides huge strains on our community, particularly for people who may be on the verge of homelessness.”

In the Silicon Valley region, characterized by the report as “San Jose-Sunnyvale-Santa Clara,” 70 percent of those in the  extremely low income bracket are severely cost burdened, meaning they’re spending more than half of their income on housing.

Only 31 out of every 100 households in this income bracket can find an affordable place to live. According to city data, San Jose has only 12,706 affordable housing units in San Jose, as of Aug. 2018.

Low said by investing in and building more housing in San Jose, “we can not only address the greatest need in our housing inventory, but we can also ensure that more units are available to help respond the homeless crisis.”

The San Jose City Council will soon discuss expansion of affordable housing funding during its upcoming April 9 meeting, as part of a new Housing Investment Plan. In a memo, San Jose Housing Director Jacky Morales-Ferrand recommends the city first prioritize “acquisition and/or rehabilitation of existing market-rate housing” by allocating $10 million for such development. Second, the memo reads, the city should spend no less than 30 percent of its housing funds on housing for the city’s lowest-income residents.

In a letter to the City Council, Destination Home CEO Jennifer Loving urges lawmaker to “be even bolder” and instead allocate 50 percent of its housing funds to low-income affordable housing.

“We must ensure that our limited affordable housing dollars go where the need is the greatest,” Loving wrote.

Morales-Ferrand addressed budget concerns in her memo, writing that “over $520 million in funding is necessary to fund the gap of 4,229 units to meet the goal of providing 10,000 affordable units.”

Jerusalem luxury homes still selling, but prices down

There were only 14 deals of over NIS 8 million in 2018 in the capital, the Ministry of Finance chief economist reports, less than a third of the number in 2010.

Jerusalem has been a real estate investment target for wealthy foreigners for two decades, who buy very luxurious housing at prices of NIS 10 million or more. In recent years, however, with the increase in taxes and implementation of the Prohibition on Money Laundering Law, the number of such investors has dropped noticeably. In 2010, foreign investors accounted for 10% of the Jerusalem market, but this dropped to 6% in 2016 and to only 3% in 2018, according to figures published by the Ministry of Finance chief economist. Foreign investors, however, are still closing 40-60 deals a month in the capital.

The chief economist found that the prices paid by foreign residents for housing in Jerusalem were still much higher than the prices paid by Israelis in 2018. While the median price paid by Israelis is less than NIS 2 million, a large proportion of purchases by foreign residents are for more than NIS 3 million. Late last year, foreign residents bought 100 housing units, with the median price being NIS 5 million.

Even though the number of deals by foreign residents is much smaller than in the past, it cannot be said that they have completely left the market.

The luxury housing market in Jerusalem is divided into local luxury housing priced at NIS 5-8 million and mega-luxury housing, for which most of the buyers are foreign residents. Both groups bought fewer housing units in 2018 than in 2017.

Only 14 deals in a year

Only 14 deals took place in Jerusalem last year at prices of NIS 8 million or more. The most expensive deal was on Carmiya Street in German Colony, where an 11-room, 680-square meter house with a 312-square-meter yard sold for NIS 58 million. In the second largest deal, a six-room, 267-square meter apartment sold for NIS 27 million.

Luxury pyramid in Jerusalem

These deals, however, were exceptions; the state of the luxury housing market in Jerusalem is far gloomier than they would indicate. “There is a big downturn in the luxury market among both foreign residents and Israelis,” says real estate appraiser Oren Iluz. “It is true that there is an increase among Israelis in comparison with 2013-2014, but if you compare 2018 to the preceding years, the decline is clear. The market is stagnating, and it’s very difficult to sell housing units. The prices in this segment are also very static; they have barely risen at all in the past four years.”

“There are luxury deals, but the sellers have to compromise. The stringent Prohibition on Money Laundering Law and the purchase tax on foreign buyers is very high, but there is still a market for luxury housing, albeit not at the prices there once were,” says real estate agent Ahituv Getz.

Disappointed developers: Prices fell 15%

One of the most prominent luxury sites in the past decade is 25-dunam (6.25-acre) Bloc 50, which lies between Jaffa Street, Hanevi’im Street, Harav Kuk Street, and Strauss Street. The site was neglected for many years until 12 years ago, when luxury housing developers trained their sights on it. Apartment prices on the site are NIS 35,000-40,000 per square meter. Africa-Israel Investments offered a penthouse in the project at 7 Harav Kuk Street for NIS 20 million, but failed to attract buyers.

One apartment there was eventually sold in 2015 for NIS 12.1 million. A nearby apartment in shell conditions (naked walls without flooring or cladding) was sold in April 2017 for just NIS 8.5 million. The state of the apartment is not enough to explain the huge different in price between the two apartments, and certainly not the difference between the initial asking price and the final price.

The biggest deal in 2018 on the site was for a nine-room apartment at 45 Hanevi’im Street, which was sold for NIS 7 million.

Another example cited by Iluz is a luxury apartment in a building at 28 Keren Kayemet Street in the Shaarei Chesed neighborhood, designated primarily for foreign haredium(ultra-Orthodox Jews). The apartment was put up for sale by a receiver. Iluz appraised it at NIS 7.4 million, but the first two attempts to sell it attracted no offers whatsoever. Three offers were made in October 2018, with the highest of them, the winning bid, being NIS 6.25 million.

Getz tells of a penthouse in a new project on Disraeli Street in Talbieh, which was sold two years ago for NIS 12 million. Six months ago, a similar apartment was sold for only NIS 10.5 million, and this is no exception. “I estimate that prices of luxury housing in the city have fallen by 15%,” he says.

He nevertheless mentions a house on Yam Hamelach Street in the Arnona neighborhood that was sold for the asking price – NIS 15 million. “It was a unique case of a buyer who found exactly the property he wanted, down to the last detail,” Getz explains.

Sellers vanishing with the buyers

In the current situation, there is not much chance of foreign residents returning to the market here in the near future. Quite a few real estate deals were made in the city using unreported capital, and there is no chance of this happening again. Furthermore, the high purchase tax imposed on investors by Minister of Finance Moshe Kahlon also applies to foreign residents. In cases of especially high prices, purchase tax can reach the 10% bracket, with tax in excess of NIS 1 million. No one likes paying such a tax.

What is to be done? Not much. Iluz says that together with the vanishing buyers, sellers are also disappearing. They are simply canceling the sale of their properties, because they realize that there is no chance of obtaining a price that appears reasonable to them. Getz says that there are still foreign residents searching for luxury housing in the capital, but that they are more choosy than ever, and are not as quick to buy as they once were.

Published by Globes, Israel business news 

Why Obaseki is embarking on luxury apartments devt in Benin, by EDPA

The Edo Development and Property Agency (EDPA) has said its foray into luxury apartment development in Benin City, the Edo State Capital is a response to the changing dynamics in the business community in the city ushered in by the booming private sector presence.

Executive Chairperson, EDPA, Isoken Omo, in a chat with journalists, said that the state government is backing the project because it aligns with its vision to open up the state for development and provide a conducive environment for investors to do business.

Recall that the agency recently signed an agreement with Iron Projects Limited for development of 18-unit luxury apartment in Central Road, Government Reservation Area (GRA), Benin City, being the first of such project in the state.

Omo said that the state government’s contribution to the project is just the landed property and provision of necessary support for the realization of the project, as there was no funding commitment on the side of government.

According to her, “The project will meet part of the housing requirements by providing shelter but more importantly, it will create economic activities which will drive employment and encourage people to come and live, work and enjoy Benin. Businesses in the state will also benefit hugely from this investment. New lines of businesses will open up as a result of this project.”

She continued, “We have hotels in Benin, like Protea Hotels and Best Western Hotel, which cater for high value individuals that come to do business in the state, but they are not sufficient because of the numbers of such visitors.

“Our development will be completely furnished and serviced to provide a home away from home for visitors. Its proximity to the Edo State Government House, Benin Airport and the Golf Course, coupled with the serenity of the location, will make it a must-have for frequent visitors to the State. We already have interested buyers for the units.”

Source: Thenationonlineng

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