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Why Kenya is not Ready for the President’s Affordable Housing

President Kenyatta is a man in a hurry. He wants to tax Kenyans to build 500,000 affordable housing units before he leaves office in three years’ time. That’s a tall order, considering that the government has only managed to build 3,000 units against an annual goal of 200,000!

UPPER INCOME

To achieve his target, the President would be looking for big money — Sh1.4 trillion, about 20 per cent of the gross domestic product (GDP). If financed entirely by debt, that translates to Sh30,000 for each one of the 50 million Kenyans.

A World Bank report shows that more than 60 per cent of Kenya’s urban dwellers live in high density poor settlements and to get them out of that squalor, we need at least two million houses, which will rise by about 250,000 units a year.

Supply of new homes to the market has increased to 15,000 a year, but 80 per cent of those target upper income earners. There are a little under 25,000 mortgages, valued at a mere 3.15 per cent of GDP in 2015. (It is 70 per cent for the US.)

The President’s housing agenda is likely to fail for the usual reasons: Weak political leadership, corruption, ‘tenderpreneur’-driven cost overruns, poor planning, lack of funds and general implementation weaknesses.

 

 

 

Again, the “affordable” housing agenda isn’t affordable to many, with each unit costing Sh2.8 million on average. Universally, mortgages for affordable housing should be the same as monthly rent payment, around 30 per cent of a family’s gross income. For Sh25,000 a month earners, affordable housing would cost Sh7,500 or less in rent or mortgage.

CLOSING FEES

Using mortgage parameters applied by the World Bank for affordable housing in Kenya, only households with a monthly income of Sh100,000-110,000 would afford such a house. Besides the monthly mortgage payment of Sh30,000, one would cough up Sh400,000 in down payment and closing fees.

For our level of income, an affordable housing scheme would need to have units that start at Sh1.2 million.

Persuasion, not coercion

This is only feasible for the government if it systematically addresses supply-side and demand-side constraints to home ownership.

The government would also need to promote its agenda through persuasion, not coercion. It must hold meaningful consultations with key stakeholders and address the concerns raised by all, including intended beneficiaries.

Given many cases of failed and underperforming state projects, widespread corruption in public tendering and procurement and capacity limitations at the national and county levels, the development community should support the country to rethink, re-engineer and retrofit its institutions through new policy instruments, processes and mechanisms necessary for a Sh1.4 trillion programme.

POLICY GAPS

A well-executed large-scale housing programme of this magnitude can be a game changer. It can fuel a construction boom, lift the economy and create thousands of quality jobs over a long period of time. Not only would it be a boon to architects, quantity surveyors, urban planners and civil engineers, but it could also underpin the centrality of technical vocational education and training (TVET) institutions in nation-building.

Don’t focus exclusively on affordable housing, but also on sustained double-digit growth to lift the citizenry out of abject poverty. The housing agenda can create the relevant interventions to the widening inequality, social exclusion, income-based segregation and the emerging dual society.

Since the government is likely to pursue public-private partnerships, it will need to update its oversight and regulatory capacity. The State would have to pursue social benefits just as vigorously as the private enterprise chases profits.

The Jubilee regime should be addressing policy gaps, institutional weaknesses and funding mechanisms and explore ways of engaging the diaspora as well as aligning national and county priorities. They could look at how China, Rwanda, Ethiopia and other developing countries are tackling housing challenges.

Source: Dailynation

Reuters poll indicate India’s moribund housing market is stuck in low gear

The outlook for India’s moribund property market has brightened somewhat, with house prices this year expected to rise more than predicted three months ago, but those increases will still be the weakest in at least a decade, a Reuters poll found.

Until 2015, India’s annual property price growth had typically been in the double digits. However, more recently a ban on high value currency notes and a liquidity shortage driven by bad debts on banks’ balance sheets have led to a cooling in lending and a housing inventory pile-up.

The latest poll of 18 property analysts taken May 10-June 3 showed home prices are expected to rise 2.3% nationally this year, up from 1.3% predicted in March but well below overall inflation.

That is much slower than last year, when house prices rose at an average rate of 5.6%, already its weakest since at least 2010, when the Reserve Bank of India started tracking changes in house prices.

House prices are expected to rise 2.5% next year and 3.8% in 2021, well below the projected pace of consumer price inflation for those periods.

But those modest rates might not even be realised as over 80% of analysts who answered an additional question said their outlook for the housing market was skewed more to the downside.

That comes despite two RBI rate cuts this year and strong chances of another one this week, although analysts are split on whether an easing would be a good idea or not.

“Five years are too short a time to undo decades of damage. The industry stakeholders have given this government the benefit of the doubt. However, with a fresh term in hand, this government will have to deliver on a lot of initiatives,” said Anuj Puri, chairman at ANAROCK Property Consultants.

The National Democratic Alliance (NDA) government, led by Prime Minister Narendra Modi, introduced a host of incentives to shore up the struggling real-estate market last year.

Modi’s party gained a huge parliamentary majority in an election last month.

“The residential sector has endured significant pain over the last few years, but the NDA government’s return to power will reassure investors of stability and continued focus on growth,” said Aashish Agarwal, head of consulting services at Colliers International India.

“While recovery will be slow and led by reputed developers in select micro-markets, a large part of the market will continue to suffer from construction delays caused by the liquidity crunch.”

What started as a bad loan problem in the banking sector last year slowly morphed into a full-blown liquidity crisis, which forced one of the largest infrastructure lending companies, IL&FS, to default on its interest payments.

“When funding becomes scarce, as a developer you become really pressurised to hive off your inventory as fast as possible,” said Rohan Sharma, head of research at Cushman & Wakefield India.

“This creates a barrier for a price run to happen even if there is demand.”

A regional breakdown of the latest Reuters poll data showed Delhi and Mumbai, India’s two most populous cities, will not contribute much to property price growth.

House prices in Delhi, including National Capital Region, were forecast to fall 2.5% this year and stagnate next year. In Mumbai they were expected to rise 0.5% and 1.0%, respectively.

“Delhi (including NCR) and Mumbai witnessed spiraling housing prices which often didn’t match with the affordability of the larger consumer base,” said Anshuman Magazine, regional chairman and CEO at CBRE.

A majority of analysts rated Delhi and Mumbai average house prices either “extremely overvalued” or “overvalued”.

However, two-thirds of the same pool of analysts said houses were fairly valued in the southern cities of Bengaluru and Chennai. Property prices in both cities were forecast to rise 2.0-3.5% over the next two years.

Source: Yahoo News

What does ‘Affordable Housing’ mean in the North East?

In our sector, there is quite rightly a clear focus on delivering new affordable homes, as the UK grapples with the ongoing housing crisis.

Housing associations across the country, including Karbon Homes, are all committed to providing ever more affordable homes, so we can help our customers – and those who are not yet our customers – find the home they need to succeed in life, whatever the tenure.

But what is affordable? The question of affordability in a region like the North East is complex. In England as a whole, median house prices are nearly eight times median earnings, but in the North East, the figure varies hugely – from three times in County Durham to way above the national average in prosperous coastal villages in Northumberland.

Overall, though, we’re facing a very different scenario than in the overheated property market of the South East.

Indeed, the difference here between social rent and affordable rent is often negligible. There are even examples where affordable rent (80% of market rent) is cheaper than social rent.

Our focus is on ensuring we provide the affordable homes that people need, with the services and transport links they require close by, all helping to build strong foundations for the communities we serve.

For us, the specific description of the rent charged is less important than an assessment of whether it is genuinely affordable.

Recently, we commissioned research to test the affordability of all our rented homes across the North East. That research demonstrated that Karbon Homes’ rents are affordable in relation to local earnings and the lowest in our peer group. But we will remain vigilant to ensure they are affordable for the customers who need them.

We plan to provide around 500 new homes each year between 2018 and 2023. This amounts to one of the most ambitious build programmes of any housing association in the region.

That programme reflects our current financial capacity, but as Karbon grows and strengthens, we hope to deliver even more.

Some of these homes will be for social rent – in Newcastle, York, Harrogate and Leeds, where we can attract the funding needed and where the condition of the housing market makes it necessary.

Elsewhere, we will develop different tenures, including shared ownership, affordable rent homes, and for rent to buy – but, importantly, only after assessing the local market to ensure we’re providing the homes each area needs.

“The finances for large-scale projects to replace homes and regenerate communities do not add up, but we are willing to look at cross-subsidy from market sale and market rent activity to make the numbers work”

Our homes will address the housing crisis as it presents itself in the areas we serve. They will be built where we can strengthen our connection with communities and help people build strong foundations for their lives.

We will also invest in maintaining and improving the homes we already provide, so our properties remain good homes well into the future.

We are also willing to consider taking on regeneration projects that are the right solutions for the communities we serve.

Too often, the finances for large-scale projects to replace homes and regenerate communities do not add up, but we are willing to look at cross-subsidy from market sale and market rent activity to make the numbers work.

It is going to be a long haul to tackle the housing crisis in our country, and we’re going to need a variety of different approaches, building partnerships with all those who can help, to address the very different conditions to be found in the UK housing market, region by region.

It is at the core of what we do that the homes we provide should be affordable, but let’s not allow ourselves to be too rigid in our thinking about what constitutes an affordable rent. Let’s just get on with providing the secure, high quality, genuinely affordable homes people need to lead successful lives.

Source: insidehousing

US Housing Problems: Innovative housing showcase proffer solutions

The U.S. Department of Housing and Urban Development (HUD) and the National Association of Homebuilders (NAHB) are sponsoring the first-ever Innovative Housing Showcase in Washington, D.C. this week.

The showcase is a five-day event that, according to HUD will display “new building technologies and housing solutions that are making housing more affordable for American families and homes more resilient during natural disasters.”

As well as 16 exhibitors, there are panel discussions and demonstrations with lawmakers, entrepreneurs, and leaders in the housing industry.

“What is really encouraging about what’s going on this weekend is that we can see the innovative spirit that still exists here in America,” HUD Secretary Ben Carson told The Epoch Times on June 1.

finance conference

“What HUD will actually be doing is working with the local jurisdictions providing reference points for grants and technical assistance, so that we can get people to remove a lot of the barriers that prevent the usage of some of these newer technologies [to improve housing],” he explained.

Housing Resilience

Housing resilience has been an ongoing issue, but has made great strides forward over the past few decades.

When Hurricane Andrew hit South Florida in 1992, more than 63,000 homes were destroyed and more than 100,000 were damaged. The scope of the damage was attributed to lax enforcement of building codes.

But, after many policy changes, Florida is now one of the best states in the country in terms of building code standards.

“By 2007 all new homes had to be constructed utilizing the new techniques, and when Irma came along in 2017 it did nowhere near the damage people were expecting for that reason,” said Secretary Carson.

But, hurricanes aren’t the only threat.

Recently, tornadoes tore through the United States from Kansas to Pennsylvania, causing tremendous damage to homes and local businesses. The Associated Press reported that there were 12 days in a row “that at least eight tornadoes were reported to the National Weather Service.”

The technology and solutions presented at the showcase aim to lessen the damage caused by such events.

“We’re talking about being able to encourage these localities to use manufactured homes and tiny homes and accessory dwelling units and some of the building techniques, in terms of their [hurricane and tornado damage] mitigation,” said Secretary Carson.

“We want to take advantage of the fact that a lot of people are thinking about tornadoes and hurricanes right now and how do we mitigate against the kind of damage that causes long term.”

Affordable Housing Solutions

In addition to resilience, the showcase tackles head on the growing problem of affordable housing.

A report by the Joint Center for Housing Studies at Harvard University showed that 11 million Americans spent more than half of their paycheck on rent in 2014. And the Wall Street Journal reported in 2018 that roughly two-thirds of renters can’t afford to buy a home.

Add to that the fact that on any given day there are more than half-a-million homeless people in the United States and roughly 11 percent of those are veterans and it’s clear that the United States is in a full-blown housing crisis.

In order to help address the crisis, companies and organizations from across the country have come to the showcase in Washington D.C. to present solutions including manufactured homes and micro-homes.

Elizabeth Singleton is the founder of Build Us H.O.P.E., a Phoenix, Arizona-based non-profit that builds tiny homes for veterans. Her organization provides long-term support services for people with mental illnesses, disabled residents, the chronically homeless, and U.S. military veterans.

“We realized the tiny house kind of settings were better in being able to build it quickly and setup a sense of community,” Singleton said.

In Phoenix, Singleton’s organization has recently built the first micro-home community exclusive to military veterans.

With Arizona now being the third worst state in the United States for affordable housing, Build Us H.O.P.E. is well-placed to bring meaningful change to an area that has increasing need.

The showcase runs through June 5 and is free and open to the public.

Source: The Epoch Times

Mixed-used development means more affordable housing in Travis County

Construction work is set to begin on three acres of Travis County-owned land in north central Austin for the first mixed-use, mixed-income development of its kind in the region. The development will include 146 apartment units and 80,000+ square feet of office space.

A groundbreaking ceremony took place Monday.

The development will be built at the intersection of Airport Boulevard and 53 ½ Street.

Of the 146 units at Travis Flats, as it will be known, 122 apartments will have rent made affordable to those people at or below 60% of the area’s median income. To date, that median income is $56,760 for a family of four. The remainder will be at market rents.

“There is a deeply affordable aspect to this project. We want to make sure that our families who are somewhere in the range of $40-45,000 can still afford to live here,” explained Precinct 1 Travis County Commissioner, Jeffrey Travillion. “We want to make sure that folks who drive buses, folks who work for the school district, folks who work for government entities can also afford it. We don’t want to see Austin become a place where only rich people live, but where the whole community can live.”

The development will be located within Travillion’s county precinct and Austin City Council Member Greg Casar’s District 4.

finance conference

“Traditionally, this has been a really mixed income area where people of all different backgrounds and professions can afford to live. But increasingly, we’re losing that in parts of the city that are close to downtown like this,” council member Casar said. “We don’t want to be a city where just the wealthiest are able to live. We don’t want to have a central city that’s essentially a gated community. That’s not what Austin is about.”

Casar says the city needs 60,000 affordable units over the next ten years if Austin wishes to maintain diversity.

“This is just one of many affordable communities that need to be created,” he continued. “Affordable housing has to be our top priority for working class folks and moderate-income folks, alike.”

Travis County Housing Finance Corporation is partnering with DMA Development Company for the multi-family component of the project.

“DMA is honored to have been selected by the County as its partner for this challenging endeavor. This groundbreaking is the culmination of three years of collaboration by the all the parties involved and proves that a product developed through teamwork is infinitely better than what any one of us could have produced in isolation,” Diana McIver, President, DMA Development Company stated in a press release. “Not only are we bringing affordable housing and jobs to a central location, this mixed-use development will be a game changer for redevelopment along Airport Boulevard.”

The county is partnering with the Southwest Strategies Group to develop the office component, which will house Travis County’s flagship Health and Human Services offices, Veterans Services, and Passport and Jury Services, as well as a small community retail space.

finance conference

“Mixed-use has occurred all over the country. However, when you use governmental entities and you put private sector facilities with them, that’s fairly new for this region, and we think that it’s an exciting opportunity,” added Commissioner Travillion. “When we’re in the middle of community, providing services for the community, we become more connected to that community.”

Judge Sarah Eckhardt spoke highly about the public-private partnership that made the project possible.

“There’s not a lot of public funding that we can put into these projects, but we can put public dirt — public property — into these projects and that’s how we are drawing private firms in to bring these really high-quality, affordable housing projects,” she said.

Eckhardt also praised the federal government for its Housing Tax Credit Program the county is utilizing.

“Because we own this property, right here in a fast-gentrifying area of high opportunity, this is like magic. We’re able to turn lead into gold and I’m really, really excited about the gold that we’re going to have right here on this dirt,” added Eckhardt.

When the development is complete, the new Travis Flats units will make up about a third of the total affordable housing units in the county.

Source: By Brittany Glas

State sends $3.4 million to fight affordable housing shortage in suburban and rural Pa.

Spiking housing costs are creating a shortage of affordable options in Pennsylvania’s suburbs and rural areas, state officials said this week as they announced $3.4 million dollars in new grants to preserve affordable housing units outside of the state’s largest cities.

“Across Pennsylvania, the need for what we would consider affordable, safe, decent housing exists regardless of your ZIP code, regardless of where you’re located,” said Kathy Possinger, director of the state agency that oversees community and economic development. “This is one of the tools we have in our toolbox of resources to be able to assist our smaller boroughs towns, townships and counties to address the growing need to preserve and grow affordable housing.”

Projects in 10 jurisdictions across PA will receive the grant funding, ranging from suburban Montgomery County to rural Indiana County.

With green lawns and white picket fences, Abington Township is hardly a poster child for gentrification. However, the state department of community and economic development
reports that housing costs have doubled in this Montgomery County suburb over the past 20 years and the township will receive a $500,000 DCED grant aimed at rehabbing eight houses for people earning low to moderate incomes there.

finance conference

Possinger said this latest round of grants is reflective of the broader nature of what is sometimes thought of as a primarily urban issue. She said the problem of burdensome housing costs were the same for city and country residents, although the nature of these costs sometimes varied. In some growing suburbs, rising tax bills and larger homes can make upkeep costs burdensome for seniors.

Other older suburbs have alternatively seen rising poverty rates. More far-flung communities have, meanwhile, experienced extreme deindustrialization, abandonment and deteriorating housing stock.

The most recent grants, which were funded through an annual infusion from the Department of Housing and Urban Development’s HOME program, will only cover home repair and rehabilitation work –– preserving, but not expanding the supply of affordable homes.

“A lot of homeowners are spending a substantial amount of their personal resources to just get by,” she said. “The larger housing systems — plumbing improvements or electrical work –– the things you might not see from the street, are the things that go unaddressed.”

Possinger said that many rural and suburban areas have also faced an extreme shortage of rental units, driving up the costs of the ones that are available.

“The demand has been exceptional and its driven up those costs in many communities,” she said. “But we didn’t have any specific projects addressing rental in this specific round of funding.”

Source: By Ryan Briggs

Affordable Housing Is Doable For Builders And Buyers, But Here’s The Problem

As home prices rise across the country, middle-class Americans and first-time home buyers often struggle to find housing within their budgets. And many would-be buyers are simply not eligible for subsidized affordable housing.

A new report, Attainable Housing: Challenges, Perceptions and Solutions, by the Urban Land Institute’s (ULI) Terwilliger Center for Housing and real estate consulting firm RCLCO explores the shortage of housing affordable to moderate-income home buyers, including first-time buyers, and offers solutions to increase the supply.

For the purpose of the report, attainable housing is defined as non-subsidized, for-sale housing that is affordable to households with incomes between 80 and 120 percent of the area median income. So, for example, in Phoenix, attainable housing would be for-sale housing affordable to households with incomes of $71,000 or less.

According to ULI, very little non-subsidized home-building activity is geared toward the middle-class price point, but evidence indicates industry leaders are starting to respond with new homes aimed at a growing and underserved market.

Innovations are coming from publicly held home builders, developers of master-planned communities, neighborhood-based real estate investors and a new breed of entrepreneurs from other industries, the report states.

ULI says today’s home buyers don’t care about having four or five bedrooms. Instead, they would rather have amenities such as a restaurant, fitness center, farmer’s market or nature trail nearby.

The report also finds that although attainable housing represents as much as 60 percent of demand in some markets, supply constraints are driving up prices on virtually all for-sale housing, and are causing lower-cost, entry-level homes to remain out of reach for renters who want to become homeowners.

The report recommends several solutions, from building higher-density neighborhoods to creating townhouse, duplex and triplex communities. Developers could also simplify their high-end homes by putting homes on the market with less square footage without compromising amenities and finishes.

“Home buyers really want that walkability,” said Christopher Ptomey, executive director of the ULI Terwilliger Center for Housing, adding: “They want to have shared outdoor spaces, they want to live in a community where they have access to the services, the retail, jobs, transportation and good schools. They want all of those things, and where you’re tending to see access to all those things these days is in walkable, higher-density communities. And they are willing to accept smaller units, but they still want a high-quality finish in those units. So they are willing to sacrifice size for quality and location.”

Ptomey said there is a divide between what buyers say they want, what exists on the ground and what is being built. “My suspicion is that when that question was asked, that developers interpreted it as OK, how do I best meet a buyer at this price point, and the answer that the developers gave tended to be things they had control over,” Ptomey says. “Frankly, it’s often easier to build a larger house on a larger lot a little bit farther out from an urban core than it is to build a smaller house in a higher-density location in an urban core area.”

Greg Ugalde, chairman of the National Association of Home Builders (NAHB), says, “A shortage of buildable and affordable lots is forcing builders to increasingly look further outside of suburban and metropolitan areas to find cheaper land that provides more building opportunities.”

In a sign that housing affordability is becoming a growing issue nationwide, home buyers are expanding their searches beyond the suburbs to far-flung exurbs, which are outlying counties of large metro areas.

Exurbs were the only region that registered single-family permit growth on a year-over-year basis as of the first quarter of 2019, according to a new NAHB Home Building Geography Index.

“The exurbs were really the only growth area at the start of the year, and the reason why is because that’s where land is relatively cheaper,” said NAHB’s chief economist Robert Dietz.

Relatively sparsely populated areas that include exurbs, small towns, rural communities and outer suburbs of small metropolitan markets have shown the largest annual single-family growth over the past four quarters while other areas have shown no change or declines.

Dietz cited several challenges to delivering affordable housing. He said, “It’s not a lack of vision or market recognition, but rather building smaller, more affordable homes is difficult when regulatory costs are high, construction costs are going up, you have this persistent labor shortage, and now we’ve got building material costs going higher because of tariffs.”

Ptomey also acknowledges numerous builders would like to focus on the moderate-income group of potential home buyers, but he says a combination of cost drivers makes it difficult.

“The labor shortage is a cost driver that there’s very little that developers can do anything about other than some of the technology that’s being developed in modular housing,” said Ptomey. “There’s a certain amount that over time technology will be able to help out with, but we’re not quite there yet. We’re only seeing 3D-printed houses in showcases. I think the panelized housing, modular housing, those technologies are growing and will help reduce the labor demand.”

Costs for materials have been increasing rapidly, particularly for steel and lumber. “It certainly is partially due to the tariffs that are in place,” Ptomey said, adding: “Some of the lumber problem is also driven by the mountain pine beetle that has devastated forests in Canada.

And again, these are things that builders have very little control over. And then you lay on top of that regulatory costs and regulatory timelines. When you have labor and material costs going up 5% to 7% a year, the longer that development timeline is extended, the higher and higher the costs get, and the harder and harder it gets to serve a moderate-income household.”

Ptomey is optimistic that builders will focus more on smaller households. “Sixty percent of households are now one- or two-person households,” he said. “People are getting married later, if at all, and having children much later. So that’s driving the demand for the smaller units, and again, as the industry recognizes this you’re going to see more and more focus on that smaller housing that’s more affordable to a moderate-income household.”

Ptomey and Dietz are of the same opinion that the NIMBY (not in my backyard) movement is standing in the way of affordable housing construction.

“Frankly, it’s often easier to build a larger house on a larger lot a little bit farther out from an urban core than it is to build a smaller house in a higher-density location in an urban core area,” said Ptomey. “I think there are two reasons: one is NIMBYism, and it can be a lot more difficult to sell a higher-density project to an existing neighborhood than it is to sell a lower-density project a little bit farther out. NIMBYism tends to be just a little bit more difficult to deal with.”

Dietz asserts builders also have to contend with exclusionary zoning requirements, which require minimum lot sizes.

“We estimate that when you add up state and local regulatory burdens, they take up about a quarter of a typical newly-built single-family home’s price,” he said. “So 24% of that price is due to regulatory costs. Those can be establishments of outright minimum lot size or a setback requirement that sets the distance between the street and the structure. They all have the same kind of effect, which is causing density to be lower.

Communities do that to prevent development, and they are often doing it at the behest of NIMBYism, people who are opposing any new development. The impact of that is where higher-density, single-family attached for-sale housing that offers homeownership opportunity is being discouraged.”

Source: Forbes

Affordable Homes Plan On — Uhuru

President Uhuru Kenyatta says his administration is on course to provide 500,000 affordable homes over the next three years.

In the coming months, Kenyatta will commission projects, including 100,000 units developed by the United Nations Office of Project Services, he said Saturday at a rally to mark the nation’s anniversary of achieving self-rule from the British. Some 12,000 acres of public and privately-owned land has been made available across the country for building homes.

East Africa’s largest economy has a housing shortfall of two million homes and only about 26,000 mortgages.Kenyatta included affordable housing in his so-called Big Four agenda — along with manufacturing, food production and health care — to also help create jobs in a nation where unemployment is a sticking electoral issue.“I look forward to handing over no less than 500,000 house keys to first-time home owners” between now and June 2022, Kenyatta said.

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“Private land has been made available for the accelerated phase of construction that will also bring on board local and international investors. Affordable and decent homes for all Kenyans are in sight.”To help boost financing for prospective home buyers, the government and private investors started a mortgage refinance company last week with the aim of more than doubling home loans in the next three years.

Kenyatta vowed to also continue pursuing an unpopular policy of workers and their employers making mandatory contributions to a housing fund.

Flanked by the nation’s Central Bank Governor Patrick Njoroge, Kenyatta unveiled new banknotes in adherence to a requirement in the 2010 constitution that the bills shouldn’t bear images of an individual.Existing notes have portraits of former Presidents Jomo Kenyatta and Daniel Arap Moi.

The new notes feature the Kenyatta International Convention Center, one of the nation’s most iconic buildings located in the capital, Nairobi, as well as wildlife including a lion and elephant.

Source: standardmedia

Montreal aims to find affordable-housing fix that has eluded Toronto, Vancouver

MONTREAL — As Toronto and Vancouver struggle to keep housing affordable for anyone but the wealthy, Montreal says its new, first-on-the-continent development model will help it succeed where other big cities have failed.

Montreal led big Canadian cities in 2018 with economic growth of almost 3 per cent, while its real estate market outperformed Toronto and Vancouver’s for the first time since 1998.

As home prices continue to climb, the city is getting ready to table a bylaw this month requiring condo developers to build a certain number of off-market units for every shiny new residential tower they want to erect.

The city promised the new rules will be flexible enough so as to not stymie the building boom, but developers are worried Mayor Valerie Plante’s administration will make future projects unprofitable.

“It will be a first in North America,” Robert Beaudry, city councillor for economic development and housing, said about the new policy. “It was fundamental for us to be pioneers … We will deliver and I am convinced it will inspire other big cities across the country.”

The city had initially planned to table its new policy months ago but negotiations with developers have taken longer than anticipated. Plante remains undaunted, however, and is determined to go ahead with her major campaign promise to increase housing affordability.

Montreal’s rules are being introduced to help people like Richard Martin, a 54-year-old man who was paying almost 85 per cent of his monthly welfare check on a $495-per-month apartment before he moved into social housing in January 2017.

“I used to have to go to a food bank every month,” Martin said in an interview at his community housing centre in the city’s east end.

Now his rent is subsidized 75 per cent, primarily by the provincial government. He lives in a new co-operative housing project where all the residents are co-owners and manage the building together.

Paying 85 per cent of his monthly income was unsustainable for Martin, who remains on welfare. But that is the reality in Vancouver, according to RBC Economics in its March 2019 housing report.

Vancouver’s housing prices increased so dramatically in such a short time the provincial government slapped a 15 per cent foreign-buyers’ tax in 2016 — but the measure has not solved the problem. RBC’s research revealed home resales in the city have dropped 58 per cent since early 2016 but home ownership costs still represent 85 per cent of the average household income.

In Toronto — where a provincial foreign buyers’ tax was instituted at the end of 2017 — the average-income household spends 66 per cent of revenues on housing costs. Montreal is still far behind — the percentage is 44.5, according to RBC.

Plante’s policy would apply to residential towers containing a yet-to-be-determined number of units, said Beaudry, who wouldn’t give too many details because of ongoing negotiations. But Plante had campaigned on a promise known as “20-20-20.”

For example, if a developer wanted to build a 100-unit building, 20 per cent would need to be considered “social” — subsidized in full or in part by the government. Beaudry said the 20 social units wouldn’t need to be within the project itself, but could be built on nearby land ceded to the city.

The rules would also require the tower contain 20 units considered “affordable.” The city’s housing authority would advance prospective buyers most of the down payment, which would be reimbursed when the owner sold.

Finally, Plante also wanted projects to contain 20 per cent “family” units — or condos with three or more bedrooms.

How flexible the Plante administration will be with her campaign promise remains to be seen.

Beaudry said his office created a detailed map dividing the city into various sectors according to property values. It put together a software program that will allow promoters to plug in their project’s data and come away with a list of the social, affordable and family units needed.

Roger Plamondon, president of the real estate arm of Broccolini, a major developer in Montreal and Toronto, said the Plante administration must understand the “20-20-20” policy can’t be applied uniformly across the city.

Land prices and demand for condos downtown are not the same as further out, he said, and the city shouldn’t apply the same policy. Following meetings with the city, he said he’s “confident” the administration appreciates his point of view.

Plamondon said he recognized the need for a “balanced market,” where high-end apartments co-exist with social and affordable housing. But the developer warned the city needs to understand that “capital in the market is very mobile.”

But so far capital in the city is staying put — and growing. Montreal benefits from the fact it doesn’t have a foreign buyers’ tax like Vancouver and Toronto. And the city’s luxury real estate market broke records in 2018 and is projected to do the same this year, according to Sotheby’s International Realty.

The city is hoping the good times can be shared by more than the wealthy.

Martin said his co-operative is sometimes hard to manage because some residents don’t fulfil their duties on certain committees, or don’t pay rent.

But he is thankful he can live in a new, clean apartment in the city, because many people in his situation aren’t as lucky. “The city’s plan is good because we need more social housing,” he said. “The waiting lists are long.”

By Giuseppe Valiante, The Canadian Press

Housing Affordability Report Outlines Challenges, Solutions For Turning Renters Into Homeowners

As home prices rise across the country, middle-class Americans and first-time home buyers often struggle to find housing within their budgets. And many would-be buyers are simply not eligible for subsidized affordable housing.

A new report, Attainable Housing: Challenges, Perceptions and Solutions, by the Urban Land Institute’s (ULI) Terwilliger Center for Housing and real estate consulting firm RCLCO explores the shortage of housing affordable to moderate-income home buyers, including first-time buyers, and offers solutions to increase the supply.

For the purpose of the report, attainable housing is defined as non-subsidized, for-sale housing that is affordable to households with incomes between 80 and 120 percent of the area median income. So, for example, in Phoenix, attainable housing would be for-sale housing affordable to households with incomes of $71,000 or less.

According to ULI, very little non-subsidized home-building activity is geared toward the middle-class price point, but evidence indicates industry leaders are starting to respond with new homes aimed at a growing and underserved market.

Innovations are coming from publicly held home builders, developers of master-planned communities, neighborhood-based real estate investors and a new breed of entrepreneurs from other industries, the report states.

ULI says today’s home buyers don’t care about having four or five bedrooms. Instead, they would rather have amenities such as a restaurant, fitness center, farmer’s market or nature trail nearby.

The report also finds that although attainable housing represents as much as 60 percent of demand in some markets, supply constraints are driving up prices on virtually all for-sale housing, and are causing lower-cost, entry-level homes to remain out of reach for renters who want to become homeowners.

The report recommends several solutions, from building higher-density neighborhoods to creating townhouse, duplex and triplex communities. Developers could also simplify their high-end homes by putting homes on the market with less square footage without compromising amenities and finishes.

“Home buyers really want that walkability,” said Christopher Ptomey, executive director of the ULI Terwilliger Center for Housing, adding: “They want to have shared outdoor spaces, they want to live in a community where they have access to the services, the retail, jobs, transportation and good schools. They want all of those things, and where you’re tending to see access to all those things these days is in walkable, higher-density communities. And they are willing to accept smaller units, but they still want a high-quality finish in those units. So they are willing to sacrifice size for quality and location.”

Ptomey said there is a divide between what buyers say they want, what exists on the ground and what is being built. “My suspicion is that when that question was asked, that developers interpreted it as OK, how do I best meet a buyer at this price point, and the answer that the developers gave tended to be things they had control over,” Ptomey says. “Frankly, it’s often easier to build a larger house on a larger lot a little bit farther out from an urban core than it is to build a smaller house in a higher-density location in an urban core area.”

Greg Ugalde, chairman of the National Association of Home Builders (NAHB), says, “A shortage of buildable and affordable lots is forcing builders to increasingly look further outside of suburban and metropolitan areas to find cheaper land that provides more building opportunities.”

In a sign that housing affordability is becoming a growing issue nationwide, home buyers are expanding their searches beyond the suburbs to far-flung exurbs, which are outlying counties of large metro areas.

Exurbs were the only region that registered single-family permit growth on a year-over-year basis as of the first quarter of 2019, according to a new NAHB Home Building Geography Index.

“The exurbs were really the only growth area at the start of the year, and the reason why is because that’s where land is relatively cheaper,” said NAHB’s chief economist Robert Dietz.

Relatively sparsely populated areas that include exurbs, small towns, rural communities and outer suburbs of small metropolitan markets have shown the largest annual single-family growth over the past four quarters while other areas have shown no change or declines.

Dietz cited several challenges to delivering affordable housing. He said, “It’s not a lack of vision or market recognition, but rather building smaller, more affordable homes is difficult when regulatory costs are high, construction costs are going up, you have this persistent labor shortage, and now we’ve got building material costs going higher because of tariffs.”

Ptomey also acknowledges numerous builders would like to focus on the moderate-income group of potential home buyers, but he says a combination of cost drivers makes it difficult.

“The labor shortage is a cost driver that there’s very little that developers can do anything about other than some of the technology that’s being developed in modular housing,” said Ptomey. “There’s a certain amount that over time technology will be able to help out with, but we’re not quite there yet. We’re only seeing 3D-printed houses in showcases. I think the panelized housing, modular housing, those technologies are growing and will help reduce the labor demand.”

Costs for materials have been increasing rapidly, particularly for steel and lumber. “It certainly is partially due to the tariffs that are in place,” Ptomey said, adding: “Some of the lumber problem is also driven by the mountain pine beetle that has devastated forests in Canada. And again, these are things that builders have very little control over. And then you lay on top of that regulatory costs and regulatory timelines. When you have labor and material costs going up 5% to 7% a year, the longer that development timeline is extended, the higher and higher the costs get, and the harder and harder it gets to serve a moderate-income household.”

Ptomey is optimistic that builders will focus more on smaller households. “Sixty percent of households are now one- or two-person households,” he said. “People are getting married later, if at all, and having children much later. So that’s driving the demand for the smaller units, and again, as the industry recognizes this you’re going to see more and more focus on that smaller housing that’s more affordable to a moderate-income household.”

Ptomey and Dietz are of the same opinion that the NIMBY (not in my backyard) movement is standing in the way of affordable housing construction.

“Frankly, it’s often easier to build a larger house on a larger lot a little bit farther out from an urban core than it is to build a smaller house in a higher-density location in an urban core area,” said Ptomey. “I think there are two reasons: one is NIMBYism, and it can be a lot more difficult to sell a higher-density project to an existing neighborhood than it is to sell a lower-density project a little bit farther out. NIMBYism tends to be just a little bit more difficult to deal with.”

Dietz asserts builders also have to contend with exclusionary zoning requirements, which require minimum lot sizes.

“We estimate that when you add up state and local regulatory burdens, they take up about a quarter of a typical newly-built single-family home’s price. So 24% of that price is due to regulatory costs,” he said. “Those can be establishments of outright minimum lot size or a setback requirement that sets the distance between the street and the structure. They all have the same kind of effect, which is causing density to be lower. Communities do that to prevent development, and they are often doing it at the behest of NIMBYism, people who are opposing any new development. The impact of that is where higher-density, single-family attached for-sale housing that offers homeownership opportunity is being discouraged.”

By Brenda Richardson 

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