Affordable housing programs under review

The housing market crash in 2008, and subsequent depressed market values and tighter lending restrictions, have forced leaders in Davidson to re-examine their affordable housing programs.

Officials of the town’s affordable housing program and the nonprofit Davidson Housing Coalition said the standards they created before the market bubble burst are no longer as relevant or effective in today’s housing economy. So they’re looking at ways to improve their programs by loosening restrictions, forming focus groups and providing additional assistance to qualified home buyers.

“When I first started, the market was booming. Market rate homes were escalating, and land was being bought up by developers,” Cindy Reid, the town’s affordable housing coordinator, said. “There was more demand for affordable housing because market rates homes were skyrocketing.”

Reid acknowledged there’s “room for change in the program to adapt to the new economy.”

She said she plans to form a focus group this year to see how the affordable housing program can be improved. She also said she’d be willing to change deed restrictions on the houses.

Another option Reid said she would be exploring this year is to offer more services to qualified buyers. For instance, the town just started a down-payment assistance program this year.

She’d also like to see the town add rental units to the affordable housing ordinance.

“Ordinances are supposed to be revisited,” she said. “The goal for this program is to look at it again, and see how does it work with the economy as we have it now.”

Davidson’s affordable housing ordinance was created in 2001 and stipulated that 12.5 percent of all homes in the community must be affordable to those making between 50 percent to 120 percent of area median income.

The ordinance requires that developers build the affordable homes in the same area as market-rate homes.

Such homes usually are not as big and have fewer features like hardwood flooring and granite countertops. “But the goal is to have them look the same on the exterior,” so they blend within the community, Reid said.

There are 53 affordable homes in the town under the ordinance, all of which are occupied.

But the ordinance has some stipulations that have made affordable homes hard sales in recent years. For instance, the ordinance requires that most affordable homes be sold with a 99-year deed restriction.

For those 99 years, the home’s sales price is calculated by a formula explained in the deed restrictions, and it has to first be offered to a buyer who meets income guidelines.

This guarantees that the home will remain affordable for that period of time but it also means that those who invest in the property are not likely to get a return on their investment.

That can be a turn-off for some buyers, especially when they see that market rate homes are now being sold for about the same price and without so many stipulations, Reid said.

“I think it does deter some people but I think it’s a choice that folks make if they want to live in Davidson,” Reid said. “This program is not for everyone though. A lot of folks would rather live in a home where the resale price isn’t restricted.”

Housing Coalition program

At the Davidson Housing Coalition, executive director Marcia Webster said mortgage lenders have tightened their policies, making it harder for the group find and close with potential buyers.

Currently, only residents with 80 percent or less of the area median income qualify for the housing coalition’s program.

Homeowners living in one of the coalition’s affordable homes are told that when they sell their homes, they must give the coalition 90 days to find a qualified buyer.

After that 90-day period, the coalition will buy the home from the property owner to make sure the home is still affordable.

“We own the land underneath and the purpose of that is to protect the long-term affordability of the property and also to make it more affordable for the lower-income home owner,” Webster said. “We want working men and women and families to be able to live in the town, especially people who work here.”

But tighter lending restrictions have made it more difficult to close a deal with a qualified buyer in that 90-day time period – and it can become costly for the coalition, Webster said.

“I’m not saying we’re going to give up the land trust, but we’ve got to figure out what’s going to be the best long-term solution, especially give the economy,” she said.

But while Webster acknowledged the system will need to be tweaked to accommodate for changes in the real estate market, she noted the affordable housing program is a necessity for those who still can’t afford market rate homes, even at depressed values.

Programs draw praise

And compared to other towns, Webster said, “I don’t know of anybody anywhere who’s come up with a better plan.”

Some developers echoed similar sentiments.

“It all comes from a good place. They don’t just want to become a wealthy suburb of Charlotte. They want to be affordable,” Jim Burbank, president of JCB Urban said. “It’s really important to them. I think that’s kind of cool.”

Burbank said the affordable housing program will become increasingly effective over time, especially those with deed restrictions. After all, market rate home values are only expected to rise. As time goes on, home buyers will increasingly be able to tell the difference between those homes held at affordable levels and market value homes, Burbank said.

And while some residents may avoid the affordable housing market altogether these days because market homes have dropped so significantly in price, others like Matt Emery said they wouldn’t have had the option of owning a property if it weren’t for the affordable housing program.

Emery, who teaches at Community School of Davidson, was having trouble getting a traditional loan for a market rate home because of credit issues.

Although he’d previously owned a home with his former wife, Emery said that making a profit off his home or having no restrictions tied to the property really weren’t priorities for him this time around.

Given the sky-rocketing rental rates and his sapped savings account, he just wanted to live in a stable environment where he could start building a nest egg again, he said.

Recently, Emery closed on the last available affordable home through Davidson’s affordable housing program.

Built in 2010, the 2-bedroom, 2.5 bath home appraised for $160,000. He bought it for $125,000. And the town helped him make a down payment.

Ultimately, buying a home through the affordable housing program proved to be the best option for Emery, he said.

“I’ll enjoy the benefits of living here and the vicinity I get to live in, be grateful for the assistance as a forgivable loan and call it a day,” he said.