Subsidized homes raise hopes in a tight market
Low-income buyers can qualify to get mortgage breaks, save thousands.
For nine years, Michelle Meeks crammed herself and her two daughters into a two-bedroom unit in what she describes as a “fly-by-night” apartment complex. The single mom saved money by skipping cable, and she slept in a bedroom where the air conditioning barely worked.
“It was horrible,” said Meeks, a maintenance worker.
Now, though, Meeks’ living situation is considerably better: She owns a brand new house with three small bedrooms, a one-car garage, granite counters, impact-resistant windows, a modest backyard and a view of a canal and a golf course.
Meeks is one of a dozen low-income homeowners who have entered Palm Beach County’s increasingly unaffordable housing market — which is pricing out even teachers, nurses and other workers with solidly middle-class jobs — by buying subsidized homes at Davis Landings West.
The 24-home community developed by the nonprofit Community Land Trust of Palm Beach County is in an unincorporated area surrounded by Lake Worth to the east, Palm Springs to the north, Greenacres to the west and Atlantis to the south. The Davis Landings rental community is nearby.
Meeks’ 1,500-square-foot home was priced at $235,000. Because she makes less than 80 percent of Palm Beach County’s median income, Meeks qualified for a second mortgage that took $79,443 off the amount she owed.
While Meeks must pay her first mortgage, she makes no payments on the second mortgage — and if she stays in the house for 15 years, the $79,443 balance disappears.
Meeks can sell the house any time she likes, but she’ll be allowed to keep only 25 percent of any price appreciation, said Cindee LaCourseBlum, executive director of the Community Land Trust. Buyers who resell within 15 years also must repay the $79,443 second mortgage.
The development aims to provide some relief to Palm Beach County’s tightening affordability squeeze.
“It’s definitely a wealth-building opportunity for people who are shut out of the housing market,” LaCourse-Blum said.
The Community Land Trust last year completed construction of the development, a mix of single-family homes and townhouses. Yet, despite an acute shortage of entry-level homes for sale, fully half of Davis Landings’ properties remain on the market.
LaCourse-Blum said it’s not easy to find buyers who are poor enough to qualify for homes in Davis Landings but prosperous enough to come up with an $8,000 down payment and win mortgage approval.
To land the second mortgage that Meeks received, a buyer can have a household income of no more than $55,440 for a family of three or $61,520 for a family of four. However, the buyer must have a FICO credit score of at least 620 and must complete a creditworthiness course.
Another challenge: How to market the subsidized properties to Realtors. When the Davis Landings homes were posted in the multiple listing service at $235,000, the properties attracted home shoppers who were too affluent to qualify, said Henry Kaplan, sales manager at Century 21 Tenace Realty in Boynton Beach.
So earlier this month, Kaplan listed the Davis Landings properties at $155,559 — with the caveat that buyers’ incomes must fall below certain limits.
“The moment I did that, the phone started ringing off the hook,” Kaplan said.
No surprise there — houses priced at $150,000 to $200,000 occupied the hottest spot in Palm Beach County’s housing market in May. Properties in that price range found a buyer in a median of just 29 days, the Realtors of the Palm Beaches and Greater Fort Lauderdale said Wednesday.
Kaplan decided not to take a commission for listing the homes, and he persuaded
the Community Land Trust to boost the commission for buyer agents to 3 percent from 2 percent.
“That definitely sweetened the pot,” Kaplan said.
Buyers are a mix of teachers, bus drivers and service workers, LaCourse-Blum said. Many moderate-income workers have grown frus
trated by Palm Beach County’s combination of rising prices and little new construction.
“A lot of people we’re targeting have given up,” LaCourse-Blum said.
While construction is done at Davis Landings, the Community Land Trust plans to build more houses. The nonprofit expects to break ground on eight homes along Kirk
Road, LaCourse-Blum said.