The Manager's report back on Affordable Homeownership Programs

Homeownership Programs

In response to the above policy order, we have assembled this report on the City’s Affordable Homeownership programs. These programs include HomeBridge, the Resale Pool, new unit lotteries, and a range of programs and services that support stabilization of low- and moderate-income homeowners. Related to these programs, this report includes the following areas: homebuyer programs details & wait times, creating new units, unit locations & composition, buyer analysis, and ownership tenure.

Since FY14, the Community Development Department (CDD) has used a system specifically designed for affordable homeownership programs that tracks program metrics and helps staff to analyze data. The data used for this report reflects all information currently available in the database system.

OVERVIEW There are more than 500 homeownership units subject to affordability restrictions held by the City, in addition to a few dozen units with affordability restrictions held by other entities, including the Cambridge Housing Authority. The City first provided technical and financial assistance to create affordable ownership housing in the early 1980s.

This commitment was strengthened after the establishment of the Affordable Housing Trust in 1988, which began to fund the development of all-affordable condominium projects. In the mid-1990s the City first offered direct funding to homebuyers looking to purchase homes on the market. In the early 2000s homeownership units created through the City’s inclusionary housing provisions were first offered to homebuyers.

These strategies to offer opportunities to homebuyers and expand the stock of affordable homeownership units are ongoing.

The majority of affordable homes in Cambridge are condominium units within all- affordable or mixed-income condominium buildings, with a small number of single- family homes. The City restricted units consist of approximately 20% units purchased on the open market with financial assistance from the City, with the remaining units almost evenly divided between non-profit developed units and units created through inclusionary housing provisions or other zoning-based incentives. The homeownership stock is approximately 25% studio- and one-bedroom units and 75% family-sized units with 2 or more bedrooms.

Most affordable homes created with City funding have been facilitated through the Affordable Housing Trust. In addition to funding the creation of homeownership units, the Trust also guides and supports affordable homeownership with related program funding and policy guidance. The Trust strives to create affordable

homeownership opportunities for moderate- and middle-income buyers and is actively involved in all aspects of the homeownership program.

HOMEOWNER CONTACT & COMMUNICATION

CDD works in several ways to maintain contact and engagement with homeowners after they purchase. Staff are available to work with homeowners when they have questions, such as about refinancing, renovation work, or selling a unit. In FY2019, approximately 10 percent of current owners contacted the Housing Division, which is typical.

Every few years, CDD sponsors a series of workshops for owners of City-assisted affordable homeownership units. Owners are invited to one of several sessions where CDD staff review questions commonly received from owners of affordable homes and discuss support and resources available through CDD and other agencies. Topics include refinancing, home repairs and improvement, and roles and responsibilities of condominium associations. The next series of workshops will be offered in early 2020.

HOMEBUYER PROGRAMS - DETAILS & WAIT TIMES

There are several ways that new buyers can access affordable homeownership units. These include the Homeownership Resale Pool, new home lotteries, and the HomeBridge program. Each program provides a different path for buyers to purchase affordable homes.

Homeownership Resale Pool

The Homeownership Resale Pool is used to select new buyers for affordable homes for every sale after the initial sale of an affordable home. This includes homes that were originally purchased through a lottery process or HomeBridge. The Homeownership Resale Pool is open to applicants earning between 50% and 100% of Area Median Income (AMI).

Minimum and maximum income requirements for homes offered through the Resale Pool vary based on the specific unit and associated monthly costs. When a home becomes available, it is offered to applicants who meet the income and unit size criteria for that home. Following the City’s resident selection preference policies, a small group of applicants is invited to view the unit at an open house. After the open houses, applicants may choose to submit an offer to indicate their interest in purchasing the available home. The eligible applicant in the highest preference group who has been in the Resale Pool the longest is given the opportunity to purchase the unit.

It is difficult to predict the wait time for any specific applicant in the Homeownership Resale Pool. Because each unit has unique costs, applicants may not be eligible for every available unit for their household size. There is not a direct correlation between

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the number of units that become available and the date that an applicant has the opportunity to purchase. For example, an applicant who is at the low end of the Resale Pool income range may be served after a later applicant for whom more units are affordable. CDD staff work with applicants to help them resolve barriers to purchasing such as credit issues or insufficient savings so that they are stronger buyers when an opportunity arises.

Applicants may stay in the Pool for as long as they like and may look at an unlimited number of units before indicating interest in moving forward with one that meets their needs. Therefore, the length of time that a household was in the pool prior to purchasing could be impacted by a buyer’s specific interest in a particular location or other factor.

Buyers who purchased through the Resale Pool since Fiscal Year 2017 had been in the Pool for a median of 2.5 years when they purchased. Wait times for those buyers ranged from six months to almost six years prior to purchase. There was not a large difference based on unit size; one-bedroom buyers had been waiting for a median of 2.7 years, while 2- and 3-bedroom buyers had been waiting for 2.1 and 2.3 years respectively.

With the current size of the affordable homeownership stock, roughly 12 to 15 units are offered each year through the Homeownership Resale Pool. As the stock of affordable homes grows, the number of resale opportunities offered each year will likely increase.

Lottery Units