Affordable Home Ownership: Keep It Affordable

14Aug18 New Pix

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DURING A PRESENTATION WE WERE MAKING ON AFFORDABLE HOUSING (also known as worker class housing) attendee questions caused the discussion to drift into the realm of government involvement with housing programs. Since we see affordable housing, particularly affordable home ownership, as a key ingredient for stabilizing communities, limited government participation (such as tax credits) that jump-starts such activity can be helpful.

Moreover, in conjunction with federal/ state funds, some municipalities may, among other things, occasionally establish affordable home programs whereby contractors compete in a bidding procedure to construct a number of homes. When built, those homes will become available to an equal number of pre-qualified first-time buyers who are usually selected through a lottery-style process and generally have incomes that do not exceed eighty percent (80%) of the median household income for the municipality’s respective jurisdiction. Then the municipality ensures the new home prices are brought down to the affordable price range by utilizing public funds to reduce the cost of each said home.

In return for the reduced home price, each buyer commits to keeping his/ her home in the affordable home program for a required period of years during which he/ she lives in the house or, if it is resold, agrees the sale’s price to the next purchaser will be in the affordable range. At the end of the commitment period the home frequently is able to be sold at market value.

While other formats may exist, this is the type of affordable homeownership program we’ve seen implemented at the local level. No doubt well-intentioned, a home ownership program fashioned in this way tends to inadvertently create certain not-so-attractive by-products. First, it sets up a situation for the first buyer, who purchased at an affordable price, but may, after the commitment period ends, sell at market value, thereby pocketing the difference. Second, those houses only remain affordable for the length of the commitment period, meaning the municipality’s affordable housing stock could be back to where it was before that housing was built. Third, only the selected few are served; those not selected do without. Forth, this type of affordable home ownership program becomes a temporary fix to a growing problem.

This is not intended to find fault with any municipality because affordable home funding typically comes with many strings attached. Still, and for the reasons stated, we believe these homes, once built, should perpetually stay affordable and should be taxed accordingly. The ability to do so should not be very complicated and should not require scraping existing programs — proper redesign and modification should be sufficient. Over time this arrangement should consistently increase affordable home ownership opportunities. Isn’t this the way it should work?


Need consulting, coaching or problem troubleshooting regarding other single-family or multi-family housing issues? We’ll be pleased to help you. Visit us at the Inhouse Corporation website or contact us at


Blog Terms of Use and Disclaimer: The purpose of this blog is to promote awareness and general discussion of the presented topic. Use of this blog shall be the reader’s agreement this blog is not a substitute for the advice of a qualified professional and each action that may be taken shall be under the specific guidance and oversight and/or performance of a professional qualified in the subject matter. If you have a question or want assistance with a featured or related matter please contact us at (include the blog article title on the subject line). Links, references and credits in this blog are for convenience only and are not endorsements by the author or Inhouse Corporation. Statements and/or opinions of guest authors may or may not reflect those of Inhouse Corporation.

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