Edgartown will take a new direction to create affordable housing, with an innovative home “buydown” program. The town will work with qualified buyers to find suitable property on the open market, then provide a subsidy of up to $200,000 to bring the price of the home down to an affordable level that works with state income guidelines.
“It’s a whole different way of looking at the problem,” said Janet Hathaway, chairman of the Edgartown Affordable Housing Committee. “It’s an easier way to put someone in a neighborhood.”
The committee has submitted its detailed 43-page guideline documents to selectmen and town counsel for review. The program could begin placing families in homes by July. The decline in home prices on Martha’s Vineyard caused problems for brokers and sellers, but it has been a rare opportunity for buyers.
“We saw a lot of houses that were coming off the $550,000, $600,000 range,” Ms. Hathaway said. “We saw them dropping to $450,000, below $450,000.
The affordable housing committee plans to identify suitable houses for purchase, creating a shopping list of sorts for people who are qualified according to their income and ability to secure a mortgage. Applicants will find a home from the list that fits their family size and income range. At closing, a covenant will be attached to the deed making the home permanently affordable. The covenant was approved at Edgartown’s annual town meeting in April.
Current guidelines, for example, allow families that earn 100 percent to 140 percent of the area median income to be eligible for the buydown program.
A family of two, making 100 percent of the median income could make up to $65,400, and could afford a two-bedroom home costing $249,500 after the subsidy. A family of four, making up to $98,200, or 120 percent of the area median income, could afford a two-bedroom home that cost $300,750, after the subsidy.
At lower price ranges, the committee realizes some of the homes may need repairs, but it will limit its choices to homes that are in good basic condition, homes that would pass a rigorous home inspection.
“We were looking at houses that may need a new front door,” Ms. Hathaway said, “a furnace, a water heater, something in the $2,000 to $5,000 range. With a little money investment, we could put someone in there. But we’re not going to take on a whole roof.”
Money in the field
Money to fund the buydown program comes from the Edgartown affordable housing trust. That trust is holding $1.3 million from the Field Club, a luxury recreation facility and residential subdivision in Katama. As a condition of the permits, the Martha’s Vineyard Commission required the builder to donate three buildable lots in the development for affordable housing. That condition was later amended to allow the Field Club to keep the lots, and pay the town $1.8 million. The club has made its first two payments. The third payment was due in March, but club executives asked for an extension to September, and the affordable housing committee agreed. After using some of the money to create the proposal and hiring an administrator to oversee the buydown program, $1.24 million remains in the trust, with the other $500,000 expected this fall.
“We’re hoping to get the program up and running in less than a month, we’re hoping before school gets out,” Ms. Hathaway said.
Several Cape Cod towns are already using buydown programs to create permanently affordable housing. Yarmouth has been the most aggressive, according to Leedara Zola, a housing specialist at Bailey Boyd Associates, who advises towns on buydown programs. The town initially funded 12 units, and has added four to five since. The economics are different on the Cape. The homes in Yarmouth’s buydown program average a market rate price of $250,000. The average subsidy is $100,000, effectively allowing a qualified family to buy a home for the equivalent of a $150,000 mortgage.
“The buydown programs are efficient because they create affordable housing fairly quickly,” Ms. Zola said. “They are some of the greenest programs, because they are reusing existing resources, they’re not putting more stress on infrastructure. They also scatter housing into existing neighborhoods, which is a positive.”
But sometimes giving $100,000 or as much as $200,000 to a single household is a tough sell for taxpayers.
“The negative I hear is, people see it as a rather large subsidy going to an individual home buyer,” Ms. Zola said. “I try to help people understand that subsidy is buying a perpetual deed rider and creating an additional unit of permanently affordable housing.”