This was the title of a post I did a couple of months ago on my outside blog. I was reminded recently, when I read a post by Esko Kiuru about the lack of affordable housing in Las Vegas, that not every resort area has good programs to help locals get affordable housing. Summit County, Colorado has a great program that is funded both by a sales tax and a tax of about $1 per square foot on new construction. I don't know that the method they used to fund it was such a good idea, but I guess the locals figured that the rich second home owners could afford to help them out! The funds are used to provide low interest down payment assistance, or even grants, for local workers. In addition, builders are encouraged to add deed restricted units to their projects when they build.
A very popular neighborhood that is mostly deed restricted is the Wellington Neighborhood, in Breckenridge. It received many awards, one being from the EPA for Smart Growth. It is built on reclaimed land that had formerly been tailings piles from mining days. This photo came from the EPA website.
We get many phone calls from possible buyers who are all excited because they just found a house or a condo that seems to be a really good buy, and they would like to see it quickly and perhaps buy it before someone else does! More often than not, they couldn't buy it even if they wanted to. The condo is a good value because it is deed restricted, and the restriction usually means that you must work in Summit County at least 30 hours a week in order to be able to own it. The county encourages developers to build workforce housing and then limit the price on it so that locals can afford to buy it. They keep the price at "affordable" levels in the future by putting deed restrictions, and sometimes appreciation caps on the home. The appreciation cap limits annual price increases to perhaps as little as 3% per year. Some locals don't like those caps as they want to be able to get the same appreciaton levels that a second home owner gets. However, they don't always have a lot of choice.
One of my clients recently got a letter from a developer stating that he would pay them to deed restrict a condo he already owns, at the rate of $20 a square foot. That means that my client would get a payment of $20,000 to restrict a 1000 sq ft condo. Not bad, but you could be devaluing it by more than $20,000. In his case, it would not be worthwhile. In an entry level condo, perhaps it might be a better deal, but it definitely restricts the saleability of it when the time comes as it limits your number of possible Buyers. The developer wanted to deed restrict an existing condo rather than build a new one as part of his project, and I am guessing that it was cheaper to do it that way. Most developers I know tell me that they sell the deed restricted units at or below what it cost to build them.
Developers are willing to build deed restricted housing because they often get density bonuses that allow them to build a market priced unit for each restricted unit and therefore can get more units than the zoning would otherwise allow. I currently have a listing for a piece of redevelopment property that is zoned for 8 units but the developer, if he puts in 2 deed restricted units, will be able to build 12 provided he has sufficient parking. It is mostly a win-win situation. One of our local banks, First Bank, has some great loan programs for first time home buyers, so locals often can buy a nice place to live, rather than have to rent all the time. We have free reports online directed toward first time homebuyers if you or someone you know needs that kind of information. After I posted my original blog post on my Summit County Real Estate blog, I had several comments from locals who lived in the affordable housing units and were happy to have them.
Please share with us what your town or resort is doing to help locals find an affordable home.
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