Subsidized home-ownership market stalled

August 14, 2009
By

David Taber

JACKSON SQ.—Urban Edge’s announcement that it is holding off on building subsidized home-ownership housing on its parcel on Columbus Avenue raised some questions at the Aug. 4 meeting of the Jackson Square Community Advisory Committee (CAC).

“Our original proposal was to develop 1562 Columbus Ave. as 37 units of [subsidized] home-ownership housing, but the market collapsed. There is no market for that now,” Urban Edge Staffer Noah Maslan said at the meeting.

Instead the CDC hopes to move forward with another piece of the plan, building 30 affordable rental units for formerly homeless families.

Many CAC member expressed concerns about the overall reduction of affordable units and the elimination of home-ownership from the first phase of the project. “We are losing over half the [subsidized] housing,” said CAC member Miriam Ortiz.

Others said they would prefer to see both rental and home-ownership options on the site. “We don’t have a mix,” said CAC member Celia Grant.

But, city Department of Neighborhood Development Director Evelyn Friedman told the Gazette in an interview this week affordable home-ownership units are just not moving.

One issue, she said, is that, with the collapse of the real estate market, people who would normally be in the market for affordable home-ownership units are finding foreclosed properties in their price range.

Subsidized units are generally priced to be affordable to families earning 80 percent of the area median income (AMI). For a family of four in Boston, that is $66,150, according to the federal Department of Housing and Urban Development.

Foreclosed properties are often a better investment, she said, because subsidized affordable units carry deed restrictions limiting their resale value.

That means demand for affordable units is down, and “capacity is more restricted also…The credit market is really, really tight. Two years ago, if you had a credit score of 450-500 you could get a mortgage. Now you have to have a credit score of 700. So there were far more people in a position to purchase,” in the past, she said.

The upshot is that, whether Urban Edge wants to start building subsidized home-ownership or not, “Neither the city nor the state are funding new affordable home-ownership development,” Friedman said.

And Urban Edge and DND are having some trouble with affordable homeownership units they already have on the market. The last two units at the 13-unit Hyde-Blakemore condominium development—an affordable home-ownership project in Roslindale that Urban Edge built with funding from city—have been on the market for more than a year, Friedman said.

The city recently subsidized price cuts for those units. Originally priced at $166,000, they are now on the market for $150,000.

“Normally, they would have been gobbled up in a couple of months,” Urban Edge President Mossik Hacobian told the Gazette.

While the market looks bleak right now, Hacobian said, Urban Edge is still hoping to eventually build subsidized home-ownership housing at the Columbus Avenue site. “Short term, its not the best use of resources, but two to three years from now that may change. From there it would take another year or two to get construction started,” he said.

If the rental project moves forward, “We can get something started on this side [of Jackson Square] a year or two from now,” he said.

Hacobian also noted that another effect of the foreclosure crisis is that there is more of a need for rental housing for homeless families.