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Hanson
"Boo" Abu would rather rent where he wants to live -- Downtown
-- than buy where he can afford -- Ladson
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If there
ever was a perfect example of a Charlestonian needing affordable
middle-class housing, it would have to be Hanson Abu.
A
professional floor installer, Abu, or "Boo" to everyone he grew
up with in Orangeburg, makes his home in the peninsular West Side
neighborhood, a few blocks off the Crosstown.
Rather, he
rents a two-bedroom, first floor apartment in a house that is nearly 100
years old where he lives with his young wife, who works in the local news
media, and their5-year-old daughter.
Between
his and his wife's salaries, Boo's small family earns a little more than
$60,000a year before taxes. Considering what they make and what they're
flushing down the toilet in monthly rent ($1,100), why aren't they buying a
home, building equity and wealth, and living out the American dream?
"Because
of the kind of work I do, I'm in a lot of homes I could not afford,"
says Boo, 33, taking a smoke break on a flooring job in Mt. Pleasant.
"A lot of times I find myself saying, 'How does anyone afford this
kind of shit?'
"And
then I remember it's America; it's debt," he says. "It's all
paper money, and in this country, ink is worth a lot."
He and his
wife, who both come from families of relatively modest means, have scraped
together about ten grand to put down on a house, Boo says. "But when I
look at the actual numbers between what's on the market and what I can
afford, the gap is just too wide.
"In
Charleston, you can rent where you want to live, or buy where you
don't."
Boo is
living the "drive 'til you qualify" lifestyle, where homebuyers
head up I-26 until they find a subdivision cheap enough for them to swing a
loan. Except he refuses to live anywhere but on the peninsula, an
increasingly difficult stance considering that the median price for homes
sold above the Crosstown in October was nearly $270,000, with
sellers getting more than 97 percent of their asking prices.
According
to a home affordability calculator found on CNNMoney's website, a family
pulling down what Boo's clan is, shouldn't be buying a home much more
expensive than $208,000, paying right around $1,300 a month in mortgage
payments.
Boo knows
he could afford a house in Goose Creek, or somewhere else out in the
sticks, but that's not why he and his new family decided to relocate to
Charleston from Atlanta.
"We
recently went to the fair in Ladson, and that sealed it; we're not living
in Goose Creek," laughs Boo, who prefers the sophistication of urban
life.
"We
moved to Charleston for Charleston," he says. "We did not move
here for long commutes, living in the country, and listening to the morning
drive radio shows. We wanted to live downtown for the vibe of the city;
everything we loved about Charleston is in Charleston."
Boo and his
wife looked for a house to buy for about a year and a half, but gave up
about six months ago.
Last year,
he found a house around the corner on Newman street for under $100,000.
"But I wouldn't raise a rat in there, much less my daughter."
Children
or a Mortgage
With the 36th most over-priced real estate market in the nation, according
to a study reported on earlier this year in Atlantic Monthly, money
doesn't go far in the Charleston real estate market.
According
to Doug Hickerson, a loan consultant at Eqqus Mortgage downtown, if a
person wanted to get out of a $1,000-a-month apartment and into a home, at
current rates, that same $1,000 would support a $120,000 mortgage,
including taxes and escrow, in Charleston County.
And what
does $120,000 get you on the peninsula? Not much, unless you count 33
Lockwood Drive, Slip A-9, in the Ashley Marina. It's nicer than it sounds,
as the "dockominium" comes with a locker.
"But
no boat," chides Boo, who was freaked out last year when his realtor
encouraged him to make a $125,000 offer on a peninsular home that had just
come up on the market, sight unseen.
"That's
the mentality around here, and it breeds such a feeding frenzy of people
wanting to buy on the peninsula. ... Where do you go for common sense in
this market?"
Starting a
few years ago, a lot of homebuyers decided to take a shortcut and took out
seductive interest-only mortgages, which typically suspend principal
payments for periods of either two, three, or five years.
The loans
became very popular as homebuyers around town, and the country, gambled on
houses more expensive than they could normally afford with long-term plans
to either refinance or cash out before rates took off again.
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As prime
mortgage rates have increased a full point over the past eight months,
it's getting harder and harder for loan consultants in the super-charged
Charleston real estate market like Doug Hickerson (l) to be able to put
middle-class singles into homes like the one medical secretary Sandra
Stringer bought on James Island
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With prime
interest rates climbing from 6 to 7 percent over the last eight months, the
historic sub-6 percent mortgages have been virtually eliminated, says
Hickerson. As a result, refinancing became very hot for a while, making a
lot of money for loan consultants like Hickerson, who says that 75 percent
of the loans he inked this year were for families trying to get into flat
rate mortgages before their interest-only adjustable rate mortgages crashed
and burned.
With the
sharp increase in prime lending rates, Hickerson now expects consumers to
have one more year, two at the most, of low interest rates.
At the
same time, he also expects for there to be a quickening in the number of
foreclosures on the market, as "interest only" families struggle
with ballooning payments.
According
to Hickerson, interest-only loans were costing home-buying consumers $458 a
month for every $100,000 they borrowed. With rates rising and many
interest-only mortgages converting back to standard ones, families could
see their monthly payments jump between $1,000-$1,500 a month, especially
for those who may have overextended themselves by jumping into the
$400,000-$500,000 house market.
"The
good news," he says, "is that MSN recently ranked the Charleston
real estate market as one of the top 10 in the country in increased sales.
Yes, rates did go up, and people need to adjust, but Charleston's market is
still increasing at a good and steady rate."
The idea
that a lender would hand him $300,000 for a new house is enticing, but Boo
knows there's no way he could afford the monthly payments -- unless he gave
up eating.
"Or
my daughter," he jokes.
"They've
all got these crazy loans that polish it up so that you're not having to
pay squat now. But when the time comes to pay, what the heck do you do
then? Interest-only loans? I don't want to walk into that trap. I want for
my family, but I want to get what I can get."
Losing
Ground
Mary Graham, the do-it-all vice president of public policy at the
Charleston Metro Chamber of Commerce, wonders if there will be anything for
Boo and families like his to buy in Charleston proper.
"We've
been doing benchmark studies," says Mary Graham, a 16-year Chamber
vet, as she pulls up the last set of numbers on her computer. "We look
at housing affordability by pulling listings from the MLS (multiple listing
service) and getting a snapshot in time we can compare from year to
year."
Graham
finds it "astounding" that on one specific day in 2001, there
were 681 properties listed for under $100,000. "Of course, 30 percent
were in Moncks Corner, Pinopolis, and rural Berkeley County -- there were
only four east of the Cooper." That was four years ago.
And
housing prices in Charleston haven't gone down. According to a story that
ran recently in The Post and Courier, more than 3,500 homes in
Charleston County alone were assessed at $1 million and above in 2003.
Two years
ago, Graham helped found the Developers Council at the Chamber, which
brought together builders and local officials in hopes of getting more work
done in the "workforce housing" arena.
"Frankly,
we haven't done enough, and a month ago we decided to refocus on the
issue," she says before sighing. "We're still losing
ground."
Not having
houses on the market that a middle-class Joe (or Boo) can afford is a real
stumbling block in luring new business to town, one of the Chamber's main
jobs, she says.
"I
hear that from companies all over the place who are trying to just recruit
people to come here, too," says Graham, who rented a one-bedroom
apartment on Adger's Wharf across from Rainbow Row for $400 a month when
she first moved here 16 years ago.
(She moved
in Sept. 1, 1989, and thanks to Hurricane Hugo, didn't live there very long
at all.)
"I
live in Mt. Pleasant now, and, boy, am I glad we bought 14 years ago, because
we could never could afford it now," says Graham. "My husband and
I won't sell, because where could we go?"
'What's
the Point?'
Now before you say focusing on Boo doesn't make sense, that his only
problem is that he's got champagne tastes on a beer budget, remember: he's
exactly the kind of guy Mayor Joe Riley is scrambling like mad to take care
of -- first and foremost in the name of diversity.
"We
want our community to be diverse because a wide range of people brings a
wide range of experiences and backgrounds, and that makes Charleston a
better place," says Riley.
Riley has
seen the hell Hilton Head has descended into. The resort island near
Savannah has became so expensive that many of its workers, no longer able
to afford living on the island, clog the main roads on their way to and
from work.
"No
one could have seen 20 years ago that cars today in Hilton Head would need
50 minutes to go six or seven miles. A lack of diversity there created
dysfunction there.
"If
we aren't diverse, and if people of modest resources are increasingly
removed or segregated, then there will be the sense that we are not trying
to be as good as we can be as a city. Look at Europe, where if you go into
the squares of the great cities, large or small, you will see that everyone
has a place."
Riley
warns that if Charleston doesn't do something about increasing its stock of
affordable housing to the widest range of home buyers, "it will come
back to haunt us."
In
response to the mounting crisis, City Hall has been busy over the past few
years, from orchestrating the buyout of a cash-poor, private affordable
housing project in the East Side to creating the ambitious Charleston
Homeownership Initiative (CHI).
With the
initiative, the City has been able to get its hands on 127 units in one
form or another, whether it be through condemnation or sales. According to
the mayor, 16 of the units have been sold, 13 are up for sale, and 98 are
in "development."
The
initiative strives to repair and restore homes, and then resell them to
families making 80 percent of the city's median income, about $40,000. With
the help of municipal, county, state, and federal grants and programs, much
of the actual cost of the house is forgiven and the first-time homebuyers
are guaranteed lower monthly payments than most standard mortgages.
Sounds
like a great solution for someone like Boo. Problem is, as much as he
appreciates Mayor Riley trying to provide "affordable housing" to
the poor and "workforce housing" to families like his, he isn't
exactly sold on the CHI.
Bo may
know football, but Boo knows the real estate game -- even if he doesn't
have the coin to play it.
Take the
house at 72 Lee St. being offered by CHI. At $104,228 for two bedrooms, one
bathroom, and just over 1,000 square feet, it looks like a steal,
especially with all the different forms of assistance City Hall has poured
into it, from lower interest rates to a turn-key rehab.
It's
$50,000 below the max he's willing to pay for a house right now. It's smack
downtown, a half-block off Meeting Street, and the raw stretch of scorched
earth across the street from the home where the Cooper River bridges used
to stand will one day be turned into a park, ball fields, and a mixed-use
retail and residential building.
In short,
it's on the verge of real renaissance and vibrancy.
But it
doesn't change the fact that Boo has better common sense than he has a
bottom line.
He knows
that since the property is part of the CHI, he won't be able to build as
much equity as quickly because the home's government-arranged financing
means the house will re-enter the market yet again as affordable housing.
"What
I'm saying is that, at this point, that house is in the 'hood and looks
over a pile of dirt. And I won't be able to do what the 'vulture
capitalist' buying into the neighborhood will be able to do: sell my house
for a profit and move on to my next house.
"Officially,
the government may 'give' you part of the house, thereby making it
'affordable,' but you still have to play by their rules," says Boo,
who doesn't relish the idea of a neighbor making scads of money by flipping
a house while he has to hand over a big chunk of his profits to Riley and
City Hall.
"What's
the point?" Boo asks.
The point,
according to the mayor, is that not everyone might need the CHI, but for
those who can't get into a normal, conforming mortgage, it's there for
them.
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For Tammy
Hoy, the executive director of the Lowcountry land trust who grew up in
public housing, affordable homes are the foundation of a balanced
community
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Radar
Screen
Knowing that Tammy Hoy grew up in public housing on the outskirts of one of
the toughest cities in America, Gary, Ind., it's not hard to understand why
making affordable housing available to everyone is her passion.
These
days, Hoy, as the first executive director of the Lowcountry Land Trust,
fights the stereotype of who needs affordable housing on a daily basis.
"The
stereotype was that there has only been these 'sorts' of people who don't
have any choices," says Hoy, who worked for Riley before the City helped
secure a $1.4 million grant to open the trust. "The reality is there's
not enough choices in affordable housing, or workforce housing, whatever
you want to call it.
"The
truth is 'affordability' is relative to what you earn and what's available
in the market. If you only earn X, and what's out there costs Y, you have a
gap."
According
to the Chamber, the median income in the tricounty area is $54,219. For a
family of four making $40,000 -- roughly 80 percent of the area's median
salary -- there isn't much wiggle room in Charleston County, where the
median home price is over $270,000.
After
attending a recent Urban Land Institute workshop, Hoy is convinced that
it's going to get tougher and tougher for Boo to find his dream home
because of a stagnant minimum wage.
"Minimum
wage acts as a precedent for other wages increasing," she says.
"With that not changing, coupled with continued rising in housing
costs, the gap is going to continue to widen. What Boo thinks he can afford
today, he will not be able to afford tomorrow. That's depressing."
Since the
fastest growing job market in town remains the service and tourism
industries -- not the best-paying fields -- Hoy expects there will be a lot
more families in the same predicament as Boo's.
As
evidence, Hoy points to a presentation for the Carolina Park residential
development west of the city she recently attended. "The news was
good; we were told the area was going to be getting 1,100 new jobs, three
new Super Wal-Marts, and more big boxes," she says. "But I raised
my hand and asked what a starter home would cost, and they were talking
about houses in the $300,000 range.
"Who
works at a Wal-Mart, making on average between $8 and $9 an hour, that
could afford to live there?"
According
to the federal department of Housing and Urban Development (HUD), a
family's debt ratio shouldn't rise above 30 percent of their income. So for
one making 80 percent of median income, they shouldn't be spending more
than about $1,100 a month on a mortgage., which is what Boo's family kicks
a month in rent.
That
$40,000 mark is important here for two reasons. One, it represents roughly
80 percent median income. Two, it's also the amount of money a mom and a
dad working full-time at a Wal-Mart would bring home (pre-tax) in a year, assuming
they worked a little overtime.
Because of
the growing gap between what most people make in the Charleston area --
which severely lags behind national median salaries for identical jobs,
according to another study the Chamber commissioned -- Hoy's only hope may
be in educating local politicians about the dangers of a non-level housing
arena.
"I've
got to get this on their radar screens," she says, before she can help
implement government programs that create incentives in the housing market,
including setting money aside to subsidize developments.
"The
City has always led in that effort," says Hoy. "It's a good
thing, but the other municipalities and governments need to follow their
lead. In Mt. Pleasant and in even some of the outlying counties, nobody has
begun to address or plan for this issue."
According
to Hoy, there are missing rungs on the housing ladder. "You can't go
from public housing to what's being built these days -- homes starting at
$250,000. Who's going to make that leap? A person who won the
lottery?!"
Have
Faith, Boo
For Sandra Stringer, finally being able to buy a home was like
winning the lottery.
"I
lucked into it, no doubt about it," says the MUSC employee, who,
because of her master's in teaching she earned at USC, jokingly refers to
herself as "the most over-qualified medical secretary in town."
Frustrated
by her relatively meager salary as compared to the price of homes on Folly
Beach where she always wanted to live, Stringer had basically given up on
finding a home.
She looked
at houses under $100,000 on James Island, but only found ones built on
concrete slab foundations ("which is crazy when you consider you live
in a flood-prone area"), ones in horrid disrepair, and (gulp)
trailers.
"Even
though you can't get trailers insured, I really thought about it when I
came across the Tern's Nest neighborhood, thinking, well, at least it's
close to Folly."
She almost
bought a house downtown, but stopped short after punching a windowsill and
hearing the telltale flutter of termite-eaten wood falling down between the
sheetrock and the outside wall.
Stringer
went back to the basics and did what she could to improve her credit score
and was soon able to qualify for a $151,000 fixed-rate mortgage to buy a
house on Fairway Links on James Island, built by local affordable housing
developer/guru Cathy Kleiman.
Even
though the house she looked at was still only a quarter of the way
completed, Stringer knew she was home. She immediately told her real estate
agent to make an offer, which was accepted. With a little financial help
from her mother, Stringer was homeless no more. The next day, she says,
there were 20 offers on the house.
"It
was sheer stubbornness on my part," says Stringer, who still clearly
delights in her newly-built home, despite half of her weekly check going
toward her mortgage and having to scrimp by so she can save enough to cover
the recent jump in property taxes.
"Sometimes,
when I come home, I think I've walked into a vacation home, and that I've
only rented it for a week. It's the nicest place I've ever lived.
"I
wish somebody would build more communities like this."
Super
Happy -- In Charleston?
Boo stresses he's neither jaded nor bitter about not being able to buy a
home where he wants to live. "The fact is, I still live where I want
to be, it's just that the living situation Charleston provides for us
doesn't always make us super happy. But I'll take it any way I can get it.
"I'm
not a guy who's pissed off; I'm pretty damn happy. I'm getting by. I'm not
living a harder life.
I just
rent."
Boo says
the trick is to stay motivated and "to keep chopping at that
tree," especially when he and his wife see friends, who got married
after them, moving into their first homes. One of the younger couples they
know even moved into a pricey East Cooper subdivision.
What Boo
does have are patience, common sense, and options.
But how
much longer will it be before market forces shove Boo and his middle-class
family out of town for good? And what other families and qualities of
living will go with them?
