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Affordable Housing Continues to Be Out of Reach for Some

Posted on: Sunday, 28 August 2005, 18:00 CDT

Aug. 28--Scott Seely fights blazes in Atlanta all year, but now he's battling for a piece of the American dream.

The 32-year-old Atlanta firefighter is looking to find an affordable house for himself, his wife, Nancie, and their Chihuahua, Bailey.

He said his condo is comfortable for now, but he and his wife want to start a family. He wants a yard where children can play and where their dog doesn't have to wear a leash. He also wants to keep his commute short, which means living inside the Perimeter.

And he wants all of this for $215,000 ... at the most. That's all he says he can afford on his salary of $40,000 a year. His wife works in the city as a paralegal, and makes about the same, but she may take time off when they have children.

Workers must make a minimum of $52,000 a year to afford a house in metro Atlanta, where the median house price is $165,000, according to a study by the Center for Housing Policy, based in Washington.

The study, released this month, stated that house prices nationwide increased 20 percent in a year and a half while wages for many remained flat. Atlanta ranked 86th most affordable out of the 183 metro areas studied.

Many key community workers -- police, teachers and firefighters -- can't afford the minimum needed to buy a home in Atlanta, the study contends.

New mortgages, such as adjustable-rate mortgages, interest-only loans and negative amortization mortgages with low monthly payments, may increase their purchasing power, but there are risks involved.

"In order to live in the city, you do have to go above your means," Seely said.

He considered an interest-only loan, but he said that after five years the interest rate could go up dramatically, and his salary may not rise to match it. The interest rate could jump to 11 percent, Seely said, and his monthly mortgage payments could go from $600 to $1,300.

Mark Scott, vice president of marketing for Atlanta-based HomeBanc Mortgage, said 67 percent of his consumers use interest-only mortgage loans to buy homes. Interest-only loans started as a way to increase cash flow for high-income individuals, Scott said, but more first-time home buyers are using them.

"You want to sit down and give it some thought," Scott said. "If you can save $600 a month, it's worth it."

Barbara Lipman, research director for the Center for Housing Policy, said the new mortgage products help people buy more expensive homes than they could previously afford. But these products assume low interest rates will last. And borrowers bank on the belief that their income will increase.

"You can be really in over your head," Lipman said. "Your monthly payments could skyrocket. And job security isn't what it used to be."

The Center for Housing Policy study concluded that a home becomes unaffordable when homeowners pay more than 30 percent of their income on the mortgage. Researchers based that on federal Department of Housing and Urban Development standards, which assume consumers make a 10 percent down payment and then spend no more than 28 percent of their household income to make monthly mortgage payments.

"There's a yawning gap between what people are earning and what they can afford in the market," Lipman said. "This disparity seems to be growing."

The study, using wage data from Salary.com, found that the median salary for an Atlanta police officer is $44,077, and an elementary schoolteacher makes $45,547. An Atlanta firefighter's median salary is $36,571 a year.

Seely said he thought about HUD's "Officer Next Door" program -- extended to firefighters -- which would allow him to buy a house at 50 percent off the price in a designated revitalization area.

But the neighborhoods -- where he would be required to stay for three years -- aren't places where he wants his kids to play or his wife to sleep alone, he said. He told HUD no.

Seely works 24-hour shifts, three days a week. He drives the fire engines.

He commutes to Station 8 -- on Marietta and Boulevard -- on his bike, 2 miles each way.

"A majority of the firefighters live outside the city," he said.

"I'm part of probably only 5 percent who live in the city. No one can justify living in a small place in the city if they can get a nice place outside."

Some of his colleagues live more than an hour away from Atlanta, in places like Ellijay and Oglethorpe. There's a catch, though. Those who live far away may not advance in rank. A promotion would mean a five-day workweek and a stressful commute each day, so some of his colleagues have turned them down.

Plus, Seely said, as a fire engine driver, he can serve residents better if he lives in Atlanta and knows the roads well.

"When that bell rings, I know where to go," he said. "Knowing how to get there means getting that engine to the front door quicker."

Dave Wilkinson, president of the Atlanta Police Foundation, said his organization had embarked on an aggressive campaign to get police officers to move into the city of Atlanta.

"The visibility of more police officers living in the city will make for a safer city, and the ability of officers to live closer to work will improve their quality of life," he said.

Many officers are interested, he said, if the price is right.

Wilkinson said that as of now, many of them say it's too expensive.

He said the Atlanta Police Foundation plans to work with the Atlanta Development Authority, which provides incentives for professionals with a certain income to live in the city.

Seely, the firefighter, said he had been approved to buy a $300,000 home, but he was concerned about making the payments.

"If we plan on having kids, which we are, we may just have to go ahead and move out of the city," he said.

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FTN,

Source: The Atlanta Journal and Constitution

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