Affordable, and empty

Some communities having trouble keeping lower-priced homes filled

Jeff and Lisa Spencer, with their children, Emily and Will, purchased their town house at Ipswich River Point three years ago as affordable housing. Jeff and Lisa Spencer, with their children, Emily and Will, purchased their town house at Ipswich River Point three years ago as affordable housing. (Lisa poole for the boston globe)
By David Rattigan
Globe Correspondent / November 27, 2011
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The Ipswich River Point development is set on 14 acres close to the town’s downtown business area. Developed by Habitech Homes, the town house development features units with hardwood flooring, granite kitchens, garages, and porches. The two- and three-bedroom units list for $349,000 to $409,000.

The town would like to sell a two-bedroom unit for about half that. Facing a deadline this week, the town has been unable to find a buyer for a $172,000 affordable unit - built similar to other town houses in the development, but offered for less. If it is not sold by Thursday, the town’s affordable housing trust may need to buy it to maintain it as part of its affordable housing stock.

With no sale after more than two months on the market, officials say that Ipswich has run into the same situation that many other communities are dealing with: The affordable-home buyer, already an exclusive category, has become increasingly hard to find. Around the region, homes designated affordable are going without buyers, a situation created by tighter lending conditions and declining prices in the housing market.

Simply put, some buyers can’t get loans, and many of those who can would rather stretch for a better deal in the open market.

“The slice of people who fit underneath the income cap but have enough money to borrow and can get the banks [to approve a mortgage] is becoming very narrow,’’ said Andrew DeFranza, executive director of Harborlight Community Partners, a Beverly-based nonprofit that serves southern Essex County affordable housing needs.

“It’s always been a small group, and this market has made that group incredibly small now, because they can buy something without a restriction for nearly the same money as a restricted unit.’’

He noted that five affordable condominiums - four in Gloucester and one in Wenham - are currently sitting without buyers. The Wenham unit, available for $157,000 on Friend Court, has been on the market for nearly a year.

“Because the real estate market is down so much, we’re in direct competition with market units for the same price. Therefore why would you take a unit with restrictions on appreciation and equity?’’ Molly Martins asked rhetorically. The chairwoman of the Wenham Board of Selectmen is also a member of the Wenham Housing Trust, which offered the unit for sale in late 2010.

One typical caveat is that typically, affordable-housing properties have price restrictions placed on future sales, to ensure that the homes remain affordable. An owner can still build some equity, but it is controlled.

In Haverhill, 16 affordable condo units have become available in the past three years, said Richard Lynch, associate director for Community Action Inc., which administrated the lotteries for the homes. There were only two buyers.

“As soon as the market started to decline, it became an issue because the market price units got very close to the affordable units,’’ he said. “The problem is that it hasn’t hit bottom, and we don’t know what the bottom is. Neither do the buyers.’’

In Andover, where the Andover Community Trust has built four three-bedroom homes since 2001 and is in the process of completing its fifth, the numbers have also dropped. Informational sessions on previously constructed houses have drawn an average of 40 potential buyers, said executive director Susan Stott, but the information session for the house scheduled to be completed in December drew only about 15. The number of applications was also fewer than previous homes.

Charles Gaeta, executive director for the Lynn Housing Authority and Neighborhood Development Associates (which builds homes in the city), said that demand has stayed strong in that city, where the building focus has been on stand-alone homes and duplexes. “I imagine that it could be a different market for condos,’’ he said.

Brian Engler, vice president of SEB LLC, an affordable housing consultant who has helped market the unit in Ipswich, noted that in general there is more demand for single-family homes than condos or town houses, as there is in the open market. He still sees a demand for affordable homes, citing a duplex unit in Rowley that sold in “a couple of weeks’’ nine months ago, and six of seven affordable units that drew buyers at Campion Estates in North Andover. The one that remains unsold is a one-bedroom unit, which as Engler noted would draw less interest because of the smaller size.

In the world of housing, there is a wide range of clients for affordable housing, from the truly indigent to working families that can use a boost. When housing advocates and planners talk about buyers of affordable units, they are usually talking about the latter group. While the specific guidelines vary from program to program, the federal standard set by HUD is those making 80 percent of the regional median household income.

In Ipswich, that translates to a family of four making $64,200 a year. It is a coveted group. One reason is that maintaining 10 percent of all housing units as affordable is the way a town can maintain zoning control if developers seek to build under Chapter 40B, the legislation governing affordable housing in the state. Developers can bypass many local zoning requirements if they build in a municipality with an inadequate supply of affordable units.

Ipswich’s percentage of affordable housing stock, calculated most recently in 2010, is 8.6 percent.

Creating opportunities for the affordable home buyer also helps the town maintain the character of its community, Planning and Development director Glenn Gibbs said.

“We would like to be over 10 percent, because it does give us greater control over how we situate affordable housing in our community, but our larger goal is to retain the diversity of our population, which we think is one of our greatest strengths,’’ he said.

The programs provide an opportunity to get into home ownership, and frequently a chance to live in a nicer venue than one could otherwise buy or rent.

The arrangement worked well for Jeff Spencer, a counselor and director of child ministries at First Presbyterian Church in Ipswich, who was just out of grad school when he and his wife purchased an Ipswich River Point town house three years ago. Research scientist Lisa Spencer had just started at her position at a Beth Israel Deaconess Medical Center laboratory, where she has since been promoted.

“We probably couldn’t have rented a two-bedroom apartment for what we were paying for mortgage and condo fees,’’ which were also reduced, said Spencer, who said the couple have decided to move elsewhere in Ipswich after the birth of their second child, now 9 months old.

In the case of the Ipswich town house, Gibbs said that if the Thursday deadline passes without an eligible buyer, the homeowner could only sell the property on the open market for the $172,000 price. However, unless the buyer of that property qualified under affordable housing guidelines, the home would not count as part of Ipswich’s affordable housing stock.

One option being considered by the Ipswich Affordable Housing Trust Fund Board is to purchase the property with the intention of reselling it to an affordable buyer. “We’d greatly prefer that it be sold to an eligible buyer’’ before the deadline, Gibbs said.

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