Cohousing-L Mailing List: Real Estate profits

[Rod Lambert (rod]

Re slowing down escalating resale prices:
Here at EcoVillage at Ithaca we are examining this question again as we work towards our 3rd Nbhd. We actually got a 18k HUD subsidy for 5 of the units in the 2nd NBHD (SoNG)but one of the units has changed hands at the new market value - there goes the affordable unit. The trick of course is to see what can be done to maintain a unit's affordability. 
One way we are looking at is to  attach the unit's sale price to the median income for the area, statistics kept by local county officials in this area so it is a relatively unbiased, official number. We are considering the idea of making several units available with significantly reduced common costs to make them initially more affordable. In return that unit would have to remain affordable to someone at 80% of the median income for the county. Owners would see an increase in value but it would track an affordable curve into the future. This is probably easier to hold to in a coop then in other legal models. Of course the non subsidized owners have to value this affordability goal enough to take on somewhat higher common costs. I would be interested in hearing feedback on this approach.
This really is a problem that needs some creative solutions.

Rod Lambert
Development Manager and Design Coordinator
Second Neighborhood
Ecovillage At Ithaca

(joke: What did the farmer experience after he had cooled his dairy herd down with spray 
from a garden hose?   A "cow-hosing moment" of course!)


<<Date: Sat, 12 May 2007 13:19:10 -0700
From: "Stacia Leech and Gary kent" <garykent [at] uniserve.com>
Subject: [C-L]_ Real Estate profits
To: "'Cohousing-L'" <cohousing-l [at] cohousing.org>
Message-ID: <000001c794d2$cece7b70$0202a8c0@murphy>
Content-Type: text/plain;       charset="Windows-1252"

Hi all:



I have had this message sitting in my 'draft' folder for a week, then
today I saw Racheli's message and felt the time was right to send it.



We are having a challenge in our community this year regarding the
prices for home sales.



The market in our area (Sunshine Coast - just north of the city of
Vancouver on the mainland) has become over inflated due to our proximity
to Vancouver and the desirability of this liveable community.  We are
blessed and cursed to be living in what the real estate industry calls
the 'Golden Triangle" - Roberts Creek on the Sunshine Coast.



Two members who are selling have priced their homes at the very top end
of the market for the size/quality of their homes. 



We have been living in community since 2004.  The homes were actually
below market when purchased in Nov '03.

This was due to a number of factors, the three important ones being:

- We were on the cusp of the building materials and real estate market
costs going up, our fixed price contract was likely 25% below what the
cost would have been six months later. 

- The tremendous amount of skilled volunteer hours put into the project
over the three year development process. 

- The skill and experience of our project manager.



Our dream in the beginning was to have a range prices for the homes with
some units being 'affordable'.  This dream quickly evaporated in the
cauldron of development.  However during the three - four years of
development the market rose and then eventually passed us we ended up
with all units below market and the smaller one bedroom duplexes prices
well below market and 'affordable'.



One of the units being sold is listed, three years later, with and
increase of $230,000 on the purchase price.



The debate we are having in our community is where do values come into
the pricing of cohousing homes?  I understand that Cohousing has (always
was in N. America?) become a middle class alternative to conventional
housing.  However the question we are asking is what is our
responsibility to the greater community and to model a new way? 



The discussion in our group moves between:

- on the one hand - that a seller HAS to price their home at max because
of the market they are buying into and that we have every right to make
such a large profit - that's what our society is all about, right?



- on the other hand - that all home purchases (location, price, size &
quality) are a 'choice'.  I.e.  we could choose to look for a home in
this area, yet not necessarilyin the golden triangle (could be within 3
miles) that is of comparable size and quality and not price our Coho
home at the max.



In British Columbia we have a housing crisis.  Young families cannot buy
into the housing market without a minimum family income of CND$75,000
per/yr and single folk with only one income, particularly those working
in the service industry can not even afford to rent here, never mind
buying.   This is having an effect on the supply of skilled and
unskilled labour on the Sunshine Coast.  This housing crisis puts the
sustainability of our community at risk. 



Legally we are in the same situation as US cohousing communities - bare
land strata does not allow for any restrictions to be placed on the
selling price of homes.



However morally and ethically it's a grey area in some minds.  It's
difficult to see someone make such a huge profit in three years that
part due to our skilled volunteer work and difficult to see no benefit
returning to the community.  Also the homes now become totally out of
reach of young families or people not in the highest wage brackets.



Have any other communities talked about this elephant in the common
house and were there any positive outcomes from the dialogue?



Cheers, Stacia Leech

Roberts Creek Cohousing