A Leg...Sideways?

Until about three years ago, home ownership seemed like the key to a better life for nearly every American. A first step up the financial ladder. And even before risky loans and reckless borrowing brought the dream to its knees, a more honorable approach to first-time home buying emerged in the form of "Below Market Rate" housing. Cities and counties throughout California began requiring that developers set aside a certain portion of new housing units in a particular development to be included in BMR programs that would allow people to own real estate who would ordinarily never have been able to afford it.

Sounds like a noble endeavor all the way around.

So check out this article in the Marin IJ. It's nominally about how the financial crisis is forcing counties to revisit how they handle these BMR programs and how this is causing an uproar among buyers of regular market rate units in those developments. The buried lead, however, can be found in paragraph three: Buyers of BMR units "must sell them at about the same price they purchased them for."

Forget for a moment that there's a financial crisis going on. Pretend it's business as usual in the world of real estate. Can anyone explain how a BMR program is supposed to help someone get a leg up in the world if the appreciation potential of the investment is essentially nil. We're not economists, but this has troubled and confused us for years. SF has a similar program and it's never made sense to us. Shouldn't BMR units at least be able to appreciate at rates similar to comparable unit in the development? Otherwise, what's the point? All the headaches of homeownership (repairs, maintenance or HOA dues) with hardly any of the financial benefits?

We welcome your thoughts on this. It's something we've wondered about for years.

Enough is enough?

Scroll down to the real eastate-related blub in this nugget from the Bloomberg Report in today's Chron. It will come as a surpirse to many in the Bay Area to hear that foreclosures show no sign of letting up. It's nice to see the notices of default are down a tad, but that doesn't mean much for those looking a present problems (or opportunities). To us, this is a reminder that, while the recovery does appear to be fully on, it is still likely to be slow and fitful. We read recently that real estate prices aren't expected to return to their pre-downturn levels for another five years. Taking the temperature of our local markets, that feels about right.