Urban planning community

+ Reply to thread
Results 1 to 5 of 5

Thread: Short sales for affordable housing?

  1. #1

    Short sales for affordable housing?

    A Cape Cod real estate company has resouces and FAQ's about short sales on their home page. If the very first page you see when you go to their website, includes this information, it must be very prevelant in the region. If you don't already know, a short sale is when the bank is accepting less than the total amount due on the mortgage. I realize there are tax implications for the buyer in these transactions and i believe it can be considered income if the sale is below market value. But does it make sense for Towns to scoop up some of these short sales using federal and local funding and rent or sell them to moderate-income households? In Massachusetts, where most of the 352 towns have not hit their magic 10% affordability number, they are seeking alternative ways to reach that 10% threshold. I wonder if this deserves some additional thought?

  2. #2
    Cyburbian Plus PlannerGirl's avatar
    Registered
    Mar 2002
    Location
    Va
    Posts
    4,604
    This has been talked about a lot here in Northern Va, the reaction from tax payers is very mixed not to mention the governments looking at doing just this are already short of money. Though the talk is all to putting the housing toward workforce (teachers, police, fire etc)

    I'm not entirely sure it would not drive down prices even further but beyond that the questions here have been:

    1) What happens when the person no longer works in X job/county/city?
    2) flipping the house in a year or two
    3) many of the short sale/bank owned/auction whatever homes here are in increasingly poor shape, covering the cost to fix them up is making them less appealing to folks here. Maybe a better Habitat project? I donno

    As a housing planner I've been watching this closely
    "They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." Ben Franklin

    Remember this motto to live by: "Life should NOT be a journey to the grave with the intention of arriving safely in an attractive well preserved body, but rather to skid in sideways, chocolate in one hand, martini in the other, body thoroughly used up, totally worn out and screaming 'WOO- HOO what a ride!'"

  3. #3
    These types of issues associated with reduced cost housing have been addressed in programs that in some places are approaching 20 years old now. The answer is deed restrictions (capping the resale value, requiring owner occupancy, etc.) and a government agency to monitor the units.

    The problem right now is how are cities going to get the money to buy the units?

  4. #4
    I know in Massachusetts where I am, many cities and towns have revenue from the community preservation act which requires an additional tax surcharge for communities that approve the Act. At least 10% of the CPA revenue needs to be earmarked for housing. This can be hundreds of thousands to millions of dollars.

  5. #5
    Member
    Registered
    Apr 2008
    Location
    City of Lynchburg, VA
    Posts
    15
    You might also want to consider HUD's $1 Homes. The program is exclusively for local governments, although you may be able to partner with housing authorities and nonprofits. Speak with your HUD regional office for details.

    I'm fairly new to HUD and housing programs, so I'm not the final word. However, it looks to me like you may have a few options with HUD.

    Does the locality have access to HOME Investment Partnership grant money? I believe that under this program, the participating jurisdiction may purchase, rehab, and sell houses. Also, they may contract with nonprofit organizations and Community Housing Development Organizations (CHDOs) to do the same. Any house receiving any HOME money must be subject to an affordability period:
    <$15K 5 yrs.
    $15K-$40K 10 yrs.
    >$40K 15 yrs.

    Be advised there are plenty other strings attached.

    I'm less familiar with CDBG, but that probably could be used for housing as well, or it could be used for housing-related expenses HOME funds may not touch.

    I agree with Gotta Speakup regarding deed restrictions and monitoring. Also, make sure any contracts to be signed for this work are specific, clear, and thorough.

+ Reply to thread

More at Cyburbia

  1. Replies: 6
    Last post: 26 Sep 2010, 9:01 AM
  2. What to do about affordable housing?
    Economic and Community Development
    Replies: 35
    Last post: 21 Oct 2005, 2:24 PM
  3. Affordable Housing BP
    Land Use and Zoning
    Replies: 1
    Last post: 25 Feb 2004, 12:57 PM
  4. Affordable Housing
    Economic and Community Development
    Replies: 3
    Last post: 07 Mar 2003, 3:49 PM
  5. Affordable housing fees
    Make No Small Plans
    Replies: 0
    Last post: 07 Nov 2001, 3:00 PM