The words actuarially sound would not be popping up on an increasingly frequent basis if the passage of HR3121 had not become a very real possibility – as well it should.
Folks on the Coast are not the only ones facing a housing crisis – just likely the only ones facing foreclosure without out a house!
As a construction specialized CPA, Sop is far more qualified to explain the housing crisis on the Coast by those numbers. So, let’s talk about the crisis here in different terms.
An adequate supply of affordable housing is the engine of economic and community development because the built community is the infrastructure of the social community.
Look across America and you’ll see example after example. Here in Mississippi, you need to look no further than the Mississippi Delta to see the impact on the economy – and how the lack of a middle class fuels the growth of an underclass.
While $58,526 is the median family income nation-wide, it is $53, 290 and $48, 938 in the two Coastal counties with current data available. Put those numbers on a map and you see median family income increasing with the distance from Katrina Ground Zero.
The story behind this set of numbers is the risk associated with an inadequate supply of affordable housing – the increased risk of unemployment and underemployment, child abuse and neglect, school drop-outs, births to unmarried teen, involvement with the juvenile justice system and other adverse life outcomes.
These risks become reality over time; but, there is an abundant body of research that tells us they’re certain to come – and ample evidence already documenting the impact of Katrina.
HR3121 is about reducing the risk of adverse outcomes in families that live in the coastal areas of our nation – and that makes it an actuarially sound solution to the nation’s housing crisis at any price.
2 thoughts on “Pick your peril!”
Wow! Good one, nowdoucit! I love how you tie it together very appropriately in the end. I really would like to see this bill passed.
I agree Belle. The reason Rep Taylor has enjoyed so much success in pushing his bill is that when the facts are examined and the sophistry is stripped away there is no good reason to be against it except from the broad philospohical standpoint that government does not belong in such matters. You won’t hear those type philosophical arguments out of the insurance industry though because their business model is completely intertwined with government backstops.
A reliable source has told me that Senator Dodd does not want to chance the HR 3121 concept to a Senate floor vote. I suspect the reason is because he knows it would pass. I’ll add it enjoys support in the Senate across party lines.
As to the housing crisis here the dynamics are somewhat unique. The market for houses priced $200,000 and up is non existent. People simply can’t afford the escrow charges for insurance and taxes but it is the insurance component that is killing people. A friend who owns a house insured for $250,000 for example has a monthly escrow payemnt in excess of $700 on top of his mortgage. Most people simply can not afford that much money for insurance. Conversely, affordable housing priced under $100,000 is also suffering. Taxes and insurance on such a house run close to $300 per month which is more than people making modest incomes can afford. The result is homeownership is not an option for those of limited means wishing to escape temporary housing. These dynamics are also at play in the rental market, I’m told insurance on an apartment unit totals $300 per month per unit these days. Rental rates start around $950 per month which approximates the pre Katrina rents for modest rentals plus the added insurance charge.
The end result is the only residential market segment still showing signs of life are homes priced from $140,000 to $170,000 and the poor are priced out of the marketplace.
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