In the world of real estate investing, many people have been advocates of purchasing in the affordable housing area. While we were certainly not unique in that stance, we do believe that now many people are jumping on that bandwagon….. And we believe that is good for not only investors but also for the general population as well.

Some real estate pundits may say that there is quite a substantial amount of available housing nationwide; however, this available supply, generally, does not reach to low-income earners in the country. The lack of affordable housing indirectly impacts the nation’s economy. How? Companies and institutions are not being productive when employees have difficulty coming to work because of the distances of their homes from their work. Employers suffer from having employees coming to work late and may have employee retention issues as well. Employees, on the other hand, also endure some difficulties from taking long commute everyday to go to work, exhaustion from travel and not getting to spend enough time for the family.

To give you an example of what is going on in my backyard, which is the Destin, Florida area, we have a HUGE problem where our area needs lots of moderate wage ($20,000 - $50,000) employees but they cannot afford to live within a 45 minute drive to their jobs. Some employers are going to the extremes of picking their workers up in a town located 35 miles away! Others, without families, are causing havoc with landlords by group 5-15 people in a 2 bedroom apartment/home.

Furthermore, it is becoming more and more difficult now for first time home buyers to secure a home loan primarily because of the continuously rising housing costs. Required down payment increases as well as monthly mortgage payments. Mortgage lenders may have programs that can entice first time home buyers but may still not be affordable for those belonging to the low- and extremely low-income earners. As a matter of fact, homeownership rate in the last quarter of 2005 decreased to 69% from 69.2% of the previous year. Though the decrease is too small, it is the first time in 11 years that the rate did not increase from the previous year according to the US Census Bureau.

SUFFERING FROM A HOUSING CRISIS

Let’s take for example the state of Maine. Though Maine’s economy is only developing at a moderate pace, property values are rapidly increasing. New jobs being created in the state offer wages that could not even afford the available housing in the area. According to Selinger, a real estate property lawyer in Maine, the lack of affordable housing for Maine’s workforce is the reason why businesses do not progress. Workers are stuck in long commutes due to a simple lack of affordable housing.

The housing crisis does not only affect Maine. The issue on the lack of affordable housing encompasses every state in the country, most especially the high-cost cities such as San Francisco, West Palm Beach and Honolulu, as well as the highly-urbanized New York and Boston. According to the US Department of Housing and Urban Development (HUD), almost 12 million households are now spending more than 50% of their income in rent and mortgage payments; THAT IS HUGE!! These households are indeed burdened by the high housing costs and not being able to afford much of the other basic necessities such as food, clothing and medical care.

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