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January 31, 2007
ARE CONDOS REALLY AFFORDABLE HOUSING?
Condos are sold as affordable housing. It is the only way lots of people can get the advantage of amenities like pools, parks, fancy clubhouses, and things like that. In some regions, common interest housing is the the only form of housing one can find. And for many, it is simply the only way they can afford a home. But are condos affordable? Many are wondering, here is a conglomeration of recent emails I received:
"I bought my condo four years ago. I was just able to get in with a creative loan. I was squeaking by to make the payments, and thought things would get better. But they are just getting worse. Everytime I re-budget, or get a raise at work, or think things will improve, my condo fees go up. Now we are facing a possible special assessment because our board did not save enough money to replace the roof. I am probably going to lose my condo. Is there anything I can do? I would like to sell it and go back to apartment living (no worries there) but the market has tanked. Do you have a solution for me?"
I wish I had a solution. Home ownership should be special. In California, as in other states, this product (condos) is sold as an "affordable, care free, get amenities" product. But there is another side. Costs have increased in every area for condo owners. They often have to pay premiums for water because use is combined into multi-living situations. Their associations have to pay commercial rates for insurance even though the housing is residential. They commonly suffer the common maladies associated with poor building construction and the higher costs of contractors insured to work in common interest developments (yes, there are special - meaning higher - rates for doing construction work on CIDs in California). And last, but not least, they suffer the ever increasing compliance costs that come with tighter, more technical and more complicated legislation, which is rampant in some states, especially California. They pay more for professional management because of training that is required to be considered "certified". But can they do without this legislation or the rights and protections afforded by it? That is the toughest thing. The associations are for the most part (since more than half the HOAs in the state are smaller than 50 units) run by volunteer boards with no training, no expertise, and sometimes, no brains or consensus building ability.
This discussion could lead to 50 blogs on the problems with HOA living. I do not want to become like the press, where it seems all bad. Because it is the bad news that makes the news. But the point I want to get across is that "affordable living" does not always mean what it sounds like. In the case for California housing, "affordable" means you can get in with creative financing, but when the costs rise seemingly without control, can you get out?
Posted by Beth Grimm at January 31, 2007 9:42 AM