35,000 More Homes Needed by 2000

That's an ad most members of a state group trying to find ways to build more affordable houses in Nebraska would like to see. The reality, however, is quite different.

According to the Affordable Housing Trust Fund Advisory Committee, that advertised brand-new home for a first time buyer in Nebraska would typically cost between $80,000 and $95,000. The family buying the house would need to earn $12.50 to $14.50 an hour to be able to afford the home. Yet, the four fastest-growth employment sectors only paid hourly wages of $5.61 to $12. The Committee concluded the cost of construction of single family homes is rising faster than wages.

In August, the Wall Street Journal reported a blistering 7.6 percent rise in wages and salaries for the second quarter of 1997 in the region that includes Nebraska. But, the article also pointed out wages in the region are generally lower than in other states. For example, while U.S. average hourly wages in July for manufacturing workers exceeded $12 per hour, wages for similar workers in Nebraska were less.

Average sales prices of single family homes in the state run even higher $105,000 to $134,000. To stay below the recommended 30 percent gross income limit for house and utility payments, people buying average priced homes in Nebraska would have to earn between $18-$22 an hour.

It is the Committee's task to couple housing needs with current and new financial resources to dramatically increase the level of affordable housing in the state. This year, The Legislature redirected $4 million a year for the next six years from state tax funds to increase the availability of new affordable housing.

One in Four Pay More

"Affordable housing" means that homeowners pay no more than 30 percent of their gross income for rent and utilities for safe, sanitary and decent housing. Energy costs such as heating, cooling, lighting, supplying water and other resources need to be included in housing costs because of their long-term impacts.

The Advisory Committee reported that "nearly one in four Nebraskans pay more than 30 percent of their gross income for rent and utilities...resulting in serious housing cost burdens for some residents..."

Not only is the cost of housing and utilities a factor, but so are wages. If the occupant's income is less than 80 percent of the region's median income or middle income range, then residents may have difficulty affording other items such as health care costs and quality child care.

At the Governor's Housing Summit earlier this year, the Energy Office said building an energy efficient home
costs $3,000-$4,000 more than standard construction. However, that same home will save 30-40 percent on heating costs and 15-20 percent on electricity bills.

Pocketing $400-$500 A Year

Using 1992-1995 average fuel prices, the savings from an energy efficient home would be $416-$555 annually, recovering the cost of the investment in about seven years. Using winter 1996-97 prices, the annual savings would have been higher, from $464-$619.

Making similar improvements in an existing home can reap nearly identical savings. An Energy Office evaluation found that installing a 90+ percent efficient furnace instead of an 80+ percent efficient furnace saves an additional $64 annually using winter 1996-1997 fuel prices. The additional cost of the more efficient furnace is only about $400. The cost of the improvements will be recovered in less than seven years, far less than the 20-30 years the furnace will last.

The state's Economic Development Department is spearheading the affordable housing effort with the Nebraska Investment Finance Authority.

Throughout the fall and early winter, the agencies expect to meet with Nebraskans across the state to develop rules on how the affordable housing trust fund will be spent.

March 1998 is the earliest projection for the funding becoming available for specific projects.

For more information about affordable housing, contact Julie Hendricks at the Department of Economic Development at 402-471-3111 or 800-426-6505.