General Plan - Moreno Valley

CHAPTER 8 – HOUSINGMORENO VALLEY GENERAL PLANTABLE 8-9Homeowner Subsidy RequirementsTownhouse 3 Bedroom/2 Bath Unit50% of 80% ofMedian Median100% ofMedian120% ofMedianIncome Level (1) $ 23,700 $ 37,900 $ 47,400 $ 56,880Affordable Housing Cost (2) $ 643 $ 1028 $ 1286 $ 1543Less Monthly Utility (3) $ 108 $ 108 $ 108 $ 108Less Maintenance Costs (4) $ 181 $ 181 $ 181 $ 181Less Property Taxes (5) $ 129 $ 129 $ 129 $ 129Less Property Insurance $ 25 $ 25 $ 25 $ 25Affordable Mortgage Payment $ 200 $ 585 $ 843 $ 1,100Affordable Mortgage (6) $ 30,062 $ 87,930 $ 126,709 $ 165,338Buyer Purchase Cost $ 7,777 $ 7,777 $ 7,777 $ 10,170Required Capital Subsidy (7) $ 81,811 $ 26,474 $( -14,836) $-55,858)Sales Price $119,650 $119,650 $ 119,650 $119,650(1) Median income for a family of four for the year 2000.(2) For a family of four based on 30% of median income.(3) Based on latest HUD published utility allowance, cost for all utilities.(4) Includes homeowner association dues, Mello Roos (a type of tax for school facilities) andmaintenance expenses.(5) Based on 1.25% average tax rate including .25% for additional assessments.(6) Based on 7% fixed rate, 30 year amortized mortgage.(7) Includes a 3% down for households at 100% of median and below; 5% down for households at 120%of median and above, plus closing costs at 3.5% of purchase price.8.3.2 OverpaymentOverpayment for housing is the result oftwo market conditions that conspire tomake housing not affordable. Thecombination of low wages and inflatedhousing costs result in overpayment. Thisdocument details the significantaffordability of Moreno Valley’s housingstock, particularly in comparison to othercommunities in Southern California.However, overpayment for housing is aproblem in all Southern Californiacommunities in varying degrees and is aformidable challenge for local communitiesto address.Overpayment is defined as a circumstancein which a household dedicates in excessof 30% of its income to housing.Households at 30% to 80% of medianincome bear the disproportionate burden ofhousing overpayment. SCAG’s preliminaryestimates of housing problems show that ofthe 39,155 total households in the city,16,193 or 41% are overpaying for housing.Of the households overpaying, 4,804 arerenter households and 11,389 are ownerhouseholds (Table 8-9). Of the ownerhouseholds overpaying for housing, 3,448had incomes at or below 80% of median.Seventy percent (70%) of the ownerhouseholds that overpay for housing haveincomes above 80% of median. Perhapsowner households may be overpaying byvirtue of individual choice versus necessity.In other words, a household may choose topurchase a more expensive house andconsequently end up paying more than 30%of their income, which by definition isoverpayment.Page 8-14 July 11, 2006