PORTLAND, OR - A collapsing market for residential real estate and the widening gap between wages and home prices are bolstering the resolve of affordable housing developers. From the private efforts of the Portland Community Land Trust to the publicly funded Portland Development Commission, the city's affordable housing community is setting higher goals as the economy squeezes more out of home ownership.
"(There are too) few opportunities in today's markets, especially when you're talking about a home large enough for a family," said Jesse Beason, executive director of Portland Community Land Trust. "They don't fit in a one-bedroom condo for $130,000 to $140,000." Between 1990 and 2008, median family income in Portland increased 82 percent from $37,100 to $67,500, according to the Portland Development Commission. The median home price jumped more than 250 percent in that time, putting affordable housing out of reach of more Oregonians. The median home price is now $283,000, up from $79,700 in 1990.
The National Low Income Housing Coalition reports that there are 29 homes available for every 100 extremely low-income families in Oregon. That translates to a need for about 150,000 units for low- and very low-income residents. Falling home values and rising inventory could be beneficial to affordable housing developers, who just a few years ago depended on luck and donors for land. "It's easier to get land for sure," said John Miller, executive director of Home Ownership a Street at a Time (HOST) Development Inc. The organization hasn't taken advantage of the market yet.
Steve Messinetti, executive director of Portland Habitat for Humanity, which recently merged with a separate affiliate in Mount Hood, also said market conditions are better for banking land. Statewide, Habitat's 34 affiliates have constructed 750 homes, which are sold at cost to low-income buyers. It wants to hit 1,000 home by 2010. "There's a hurricane every day and a tsunami ever day in our cities in terms of people struggling with poverty and affordable housing," Messinetti said.
The Portland Development Commission also is developing affordable housing. Charged with promoting home ownership among low-income and minority residents, the agency is issuing more mortgages, providing down payment assistance and, new this year, a mortgage credit that turns mortgage interest into a tax credit and reduces the cost to borrow money.
The program began in June and already has approved seven applications. The agency wrote 41 mortgages for the year that just ended, up from 14 the previous year. Portland Community Land Trust, which sells houses but not the land they sit on, is looking at the down market as an opportunity to buy land. It's also launched its first condominium project, which should be done in early 2009.
The company's approach takes $75,000 to $100,000 off the price of a home by insulating buyers from soaring land values. Buyers benefit from the lower price and a break on property taxes. HOST is working on Helensview, a 52-home sustainable subdivision in Northeast Portland. Ten of the 18 units in construction in the first phase have sold for prices ranging from $180,000 to $220,000.
The nonprofit wants clients to build wealth through home appreciation, Miller said. It recently sold its 350th home and serves families earning 70 percent to 100 percent of Portland's median income. It keeps costs down with a program that waives system development charges for low-income housing, which shaves about $12,000 off the purchase price. It focuses on neighborhoods that qualify for property tax abatements.
Source: Portland Business Journal