Vineyard applicants find affordable housing is not so affordable

The Wentworth Way affordable townhouses in Vineyard Haven offered for sale have found few takers among the many who expressed an interest. — Photo by Ralph Stewart

The number of affordable housing units available for rent or purchase on Martha’s Vineyard is at an all-time high, but Island housing officials say that fewer Island residents are financially qualified to buy, or even rent, housing priced as low as 50 percent of market home prices and rental rates.

Philippe Jordi, executive director of the Island Housing Trust, earlier this month reported that only three of 38 Island residents who expressed interest last December in purchasing one of four affordable Wentworth Way townhouses on Lake Street in Tisbury, offered at bargain prices that ranged between $184,500 and $225,000, actually completed the process and qualified to purchase one of the houses.

This week, Mr. Jordi said IHT has since added a fourth qualified applicant and is under contract to sell all four townhouses.

One $184,500 house was awarded, and a second house, at $225,000, is in the process of being awarded to one of two qualifying candidates. The remaining two houses are available on a first-come, first-served basis.

On the rental side, Dukes County Regional Housing Authority (DCRHA) executive director David Vigneault said last week that his agency is seeing unprecedented turnover in the 71 affordable rental units it manages for itself and Island towns.

There are an estimated 337 affordable Island rental units today, and 85 affordable houses and homesites have been created by Island housing groups over the past decade, Mr. Vigneault said.

Mr. Jordi and Mr. Vigneault and several other housing sources said the problem is not a lack of demand for housing, but the reduced earning capacity and debt loads that lead to the inability of residents to pay the rent or to qualify for a mortgage to buy a house. They cite three years of economic grinding that has worn away incomes and raised credit card and other debt levels for many working Islanders.

“More affordable housing has been created here in the past decade than has ever existed here but people are struggling,” Mr. Jordi said. “Their margins are gone. The people we’re seeing work hard, have multiple jobs. They are raising their kids here and looking to retire here. The stereotype profile simply doesn’t exist.”

Following the disappointing response to the home ownership opportunity last month, Mr. Jordi surveyed 32 of the 36 respondents, including 29 residents who abandoned the qualifying process to assess the causes. “Of the 38 potential candidates, only three people who requested applications followed through and were qualified to participate,” he said in a telephone conversation about the survey results.

“I spoke with 32 potential applicants, including the three qualifiers. The vast majority, 65 percent, believed they weren’t financially ready – their income was insufficient or they had credit issues. Some didn’t have the capital for a down payment. Another has worked for years but has no credit because he or she has never used credit.

“Of the remainder, 16 percent cited a variety of reasons – the town or the house size didn’t fit their needs, particularly for families with kids in school, or their income was more than the program allows. Three people said the process confused them and they believed they didn’t qualify, though in our conversation it turned out they did qualify.

“An affordable home purchase is a great opportunity to buy a home and to build equity (capped by law at four percent per year) but it does require capital for a down payment of 10 percent. We’ve made an award of one home for $225,000 to the sole candidate who qualified, and two other candidates are in a lottery process for the right to purchase one of the $184,500 houses.

“Credit and mortgage issuers are getting stricter since the housing collapse. And we have the best of the banking situation here. Island banks go out of their way to help, but you’ve got to have the credit scores to prove credit worthiness. It’s a big issue.”

AMI is a key

The application process for affordable home-buying or renting occurs in several steps and the first key is median income. To be eligible for home-buying programs, applicants must earn less than the average median income (AMI) for the county, based on a sliding scale related to family size. AMI numbers are set by the U.S. Department of Housing and Urban Development.

For example, a single person earning $48,480 would be at 80 percent of the single-person county AMI of $60,660 and would qualify — on an earnings basis — to apply for one of the $184,500 homes which were designed for the 80 percent AMI market. With earnings of $60,600, the same person would qualify to apply for a $225,000 home, designed for applicants making 100 percent of the county AMI.

A family of four making $69,200 would qualify for an 80 percent AMI home and the same family earning $86,500 would qualify for the 100 percent AMI home.

Rental waitlist grows

Mr. Vigneault said that he has a waitlist of 195 applicants for below-market rentals, but he’s also observed current renters leaving at winter’s onset because they cannot meet rent payments or fear they will be unable to meet the rent over the winter. “We have several tenants who are doubling up, renting one apartment together,” he said. “Others are ‘couch-hopping’ with friends. They tell us they don’t think they can carry the rent this winter.”

A detailed DCRHA analysis of the income levels of 291 residents who completed applications and are currently on a wait list for rental units revealed that 168 applicants, nearly 86 percent of the total, reported incomes of less than 60 percent of average Dukes County average income.

By town, the breakdown is: Oak Bluffs (61 applicants), Tisbury (59) Edgartown (48), West Tisbury (18), Chilmark (6) and Aquinnah (3), according to a chart Mr. Vigneault provided.

In addition, 57 percent of the 291 home-buying applicants earn less than 80 percent of the AMI and 77 percent make less than 100 percent of AMI.

Affordable housing professionals say that the tightening job market has reduced many residents’ incomes and that people in housing trouble are not the chronically poor. Rather, they are working families who have lost their primary jobs or the second and third jobs they work to make ends meet. Others are working reduced hours as a result of the economic pinch on employers.

“The cycle has been that everyone works hard all summer, stores up the chestnuts for winter, maybe using credit cards as a little cushion to get through until spring,” Mr. Vigneault said. “They typically paid down the credit cards during the season.

“That hasn’t happened over the past three years. The winter work isn’t there, the part-time jobs and hours aren’t there. They have no cushion left.”

Earnings qualification is the first hurdle, according to Mr. Jordi. “Our applications are those typically required by the state for a no-document loan, and people pre-qualify by filling out the application,” he said. “Many who drop off aren’t qualified and find they can’t get financing.

“We require a home buying training seminar for first-time home buyers, a three-hour workshop with bankers, attorneys and affordable housing professionals. It is a complicated process. Applicants learn whether they have the income and credit worthiness. We ask them to go to a banker to evaluate their bank ability. Many applicants haven’t had credit cards or haven’t paid off their credit cards, and their credit scores have suffered.”

Mr. Jordi noted that a committee of affordable housing agencies and the Martha’s Vineyard Commission have established a task force to look at what he and others see as a growing problem of affordability of affordable housing.

“Are we falling behind?” he said. “Are the AMI standards too high ? Good questions.”

January 25, 5:30 pm: This story was modified to reflect updated information.