Re: Affordability- long term
From: Elizabeth Magill (pastorlizmgmail.com)
Date: Thu, 8 Sep 2016 07:29:37 -0700 (PDT)
> This may have been suggested before:
> Why not link affordability to median income in the county (or other
> definition of area).
> Suppose one "buys down" a unit so that someone earning 80% (or other %) can
> afford it. Would it not be possible to require that unit to remain at 80%
> each time it changes hands? That would still allow the owner to acquire
> some increase in value.
>
> It would require the other members of a group to pay a little more
> initially for their units but they can participate fully in market value
> increases.

This is precisely what Mosaic Commons and Camelot Cohousing did. The
state has an affordable program that allows us to override restrictive
zoning regulations if 25% of the houses are affordable in a community
that doesn't have many affordable homes. Affordable is defined as 80%
of median income.

So everyone who bought a market rate home paid extra for their home,
and the 25% affordable home prices were set such that a person who
made 80% of median income could afford a mortgage and condo fees.
The long term cost to the market rate folk is the cost of the mortgage
on the higher priced home and the market rate homes all have a higher
condo fee rate covering for the affordable homes.

We all chose to do that voluntarily, although there were other
complications caused by the real estate market collapsing such that
the market rate folk don't all bear that burden proportionally.

The affordable homes can go up by restricted percentages over time,
taking into account what 80% of median income is. However, if median
income goes down (as it has) the resale price doesn't drop.

Here are the (not insurmountable) problems we have faced:

1) Home ownership for a person making 80% median income presumes a
great deal of saving up--but there was a limit if you saved too much
you no longer qualified.

2) The program *requires* a mortgage. That is, you can't qualify if
you have enough money to buy a home (or even to put 50% down).

3) Requiring a mortgage meant that essentially a person had to make
not more than *and* not less than 80% median income. For our 3BR I
think we figured the wiggle room was about $1000 of yearly income. If
you made less you didn't qualify for the mortgage, if you made more
you didn't qualify for the program.

4) Technically, you couldn't get help for down payments, etc. We found
ways around this but...those were the rules.

5) Because the program required all of us with market rate homes to
subsidize the cost, we didn't include any of the largest homes in the
program. So, for example, if by "families with children" you have a
hope to reach families with more than, say, 2 children, it costs even
more. (one family with 4 children did buy a 3 BR home (1050sf) but
others chose not to buy.)

6) It was hard to sell the affordable homes. And now it is hard for
the buyers to resell them. We are not near public transportation.
(however, homeowners can sell them at the affordable price to someone
who doesn't qualify by the rules once the home has been on the market
for some set period of time. The restrictions on the next resale
remain in place.)

I say these are not insurmountable because of course if you are
arranging the program yourself, rather than using a state program, you
can set the rules yourself, and get away from some of our challenges.

NOTE that the fact that I paid a premium for my home in order to
subsidize the other homes (voluntarily, and gladly, I assure you) does
make it less likely for me to want to miss out on a profit should the
world change in a way that a profit is possible on my home.

-Liz
mosaic commons cohousing in Berlin, MA, not berlin germany.

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