New programs help plug the income gap for buyers

Neighborhood groups offer variety of buyer-assistance programs

To afford a mortgage on a median-priced home in Southwest last year, a household would have to earn about $70,000 a year.

That income is out of reach for many families, even those with two people working full-time.

It’s a gap that has affordable housing advocates and some neighborhood groups concerned and trying to take action.

But high land values and in-demand neighborhoods make affordable housing programs particularly challenging to pull off in Southwest, those who are working on the issue said.

Many neighborhood groups have programs to assist existing residents in rehabilitating their homes, but few have programs to assist people in purchasing homes.

The five-year-old City of Lakes Community Land Trust has only recently reached into Southwest with its programs. In exchange for ownership of the land, the trust offers qualified clients significantly lowered mortgages.

“To take that on in Southwest would have been a pretty steep climb immediately,” Director Jeff Washburne said.

Instead, the land trust started with the financial path of least resistance, working in neighborhoods where land values were much lower. He said they encountered skepticism in some areas.

“One thing we heard from impacted neighborhoods was if you can pull this off in Southwest, comeback and talk to us,” he said.

That’s why its recent partnerships with the Fulton and Lyndale neighborhoods are so exciting, he said.

Ahndi Fridell, chair of the Fulton Neighborhood Association housing committee, said the committee spent more than a year deciding how it could best spend money allocated in its budget for affordable housing issues.

It settled on a partnership with the City of Lakes Community Land Trust that will assist one public-housing client purchase a home at a reduced mortgage.

“I think there was a strong feeling that we wanted the money to be used in Fulton,” she said.

The Lyndale neighborhood has also partnered with the City of Lakes Land Trust and has another program to assist first-time home buyers.

The Lyndale Neighborhood Association and Lyndale Neighborhood Development Corporation will cover up to $3,000 of a down payment, closing costs or housing rehabilitation payment for first-time buyers in Lyndale. The program helps any first-time buyer purchasing a house, duplex, town home or condominium, regardless of income.

Neighborhood Revitalization Program money is used to fund the program, which does have one catch. Anyone who uses the program and lives in a home for less than 10 years has to pay the neighborhood groups back in full.

Melanie Majors, executive director of the Lyndale development corporation, said the program is meant to build stability in the neighborhood by giving buyers a small incentive to stay. Plus, if buyers stay in Lyndale even a few years, they will benefit from price appreciation, Majors said.

Representatives from neighborhoods that do not have buyer assistance programs said they haven’t had trouble attracting buyers to the neighborhood or that homes there are too expensive to offer much help.

In the Calhoun Area Residents Action Group (CARAG) neighborhood, a buyer’s assistance program hasn’t been feasible because of the increasing home values, said Scott Engel, community coordinator for CARAG. Engel said the funds wouldn’t be able to contribute significantly toward a home purchase in the area.

For more information about Lyndale’s programs, call 824-9402 or go to www.lyndale.org. To learn more about Fulton’s programs, call 922-3106 or visit www.fultonneighborhood.org.

 

Reach Dan Haugen at 436-5088 or dhaugen@mnpubs.com or Jake Weyer at 436-4367 or jweyer@mnpubs.com.