Switching Homes to Address Crisis

         SWITCHING HOMES TO ADDRESS THE HOUSING CRISIS

     Why is it not possible--or of no consequence--to have families move out of more expensive homes which they cannot afford into lower priced homes which they can afford, and that exist within the same general areas or within distances which do not cause an reasonable travel inconveniences and expenses to workers and families?  

     For purposes of illustration, two methods are suggested, using the following simplified numbers and situations representing various home buyers:

    HOME OWNER                     MORTGAGE                              MONTHLY NOTE

               (1)                                      $800,000                                        $8,000    

           

               (2)                                        600,000                                           6,000

               (3)                                        400,000                                           4,000

               (4)                                        200,000                                           2,000

               (5)                                        100,000                                           1,000

METHOD I

     Suppose that home buyers (1), (2), (3), (4), and (5) are in homes they cannot 

afford but can afford one of the lower priced homes listed.  Each homeowner could be allowed to assume the mortgage of one of the less expensive home that the family can afford, maybe the most expensive home the family can afford.  Ideally, (2 )has a home and monthly payment (1) can afford; homeowner (2) pursues the home of homeowner (3); and homeowner (4) buys the home of homebuyer (5).  The point is to get families into homes they can afford at this time.  The home of home buyer (1) could be sold as described in METHOD II.

     All mortgages that are endangered would be identified, and arrangement made, with government help, to work out exchanges among the lending agencies and home buyers.  Government financial interventions may be used, where needed, to expedite the mortgage exchanges.

METHOD II

     Suppose home buyer (1) can no longer afford a monthly note of $8,000 but can afford the monthly payment of $4,000 on house that Homeowner (3) owns.  And suppose Homeowner (3), whose house is paid out, would like to--and can afford to--buy a larger house, maybe the one home buyer (1) or (2) is buying.  Let them switch homes, with (1) now acquiring a mortgage on the home owned by (3), who would use that money paid for his home as down payment on the larger home.     

     Why would these not be possible--and practical--within a defined geographical area? And why might it not be possible even over a wider area if homeowners are willing, and find it to their advantage to travel farther to work if they can keep and live in their own homes?  A tax credit for gasoline and toward the purchase of a new car for transportation might be offered.

     In each case there would be a problem of matching compatible homeowners.  But whatever can be achieved might be worth the effort.

     Something similar happens with renters:  When family incomes become less, families move to apartments where the rent is lower. 

Ronald C. Spooner