For Portland-based real estate developer Nathan Szanton, creating new affordable housing is a mission.Szanton’s company is halfway through the 18 months of construction of a four-story apartment complex in Bath called The Uptown. It will have 60 apartments, and three-quarters of them will be set aside for low-income residents.Szanton said in an interview, “If these were luxury condominiums, probably I could make a lot more money, but that’s not the business I’m in.”Instead, The Szanton Company specializes in building affordable rentals in Southern Maine.”I’ve always wanted to try to provide housing for a diversity of people, a diversity of incomes, and not just the top echelon,” Szanton said. “I think it helps make our society better if people who are struggling to find stable housing can find more if it. The people who are well-to-do have plenty of options.” The Uptown will have mostly one-bedroom apartments and some two-bedrooms.A 600-square foot one-bedroom will rent for $1,250 a month at market rate, and the affordable rate will be $950.What “affordable” generally means is only people who earn up to 60% of an area’s median income can apply, and their rent is capped, so they pay no more than 30% of what they make.Szanton said, “Experts on housing and finance say that a family or a household shouldn’t spend more than about 30% of their income on the combination of rent and utilities, or if you’re a homeowner, on a combination of a mortgage, insurance, and taxes.” At Milliken Heights, Szanton’s new development in Old Orchard Beach, 40 of the 55 affordable one-bedroom units are rented, and it opened just one week ago. Szanton relies on federal tax credits awarded when at least 60% of units are affordable. The credit goes to banks, who then give him cash to reduce the amount he must borrow.Szanton said, “Without those financing programs, you can’t make the financing work and still charge low rents.” In Bath, state historic rehabilitation tax credits spurred the project, as some apartments will be in a renovated 1893 YMCA building designed by renowned architect John Calvin Stevens. “This was a vacant lot owned by the City of Bath. We had to convince the city to sell it to us,” Szanton said. “In Southern Maine, land prices have just shot up in the last 10 years or so, so finding a site that we can afford to buy, that’s in a good location where our residents can access the services that they need, is really a challenge.” Szanton designated both The Uptown and Milliken Heights for residents 55-years-old and older. Federal discrimination law allows a minimum age requirement to create affordable housing for senior citizens.Szanton said of the Bath project, “We opted to make this 55-plus to reduce the number of cars that we’d likely have to accommodate, because our parking – we had less than one parking space per unit. So, we decided to feature older residents who are less likely to drive a lot of cars.”Both developments are in walkable neighborhoods near amenities like grocery and hardware stores, libraries, and parks. The Old Orchard Beach project is also near a bus line.”Because more people want to live in Southern Maine than we have dwelling units for them, prices just keep going up and up and up, and who gets hurt by that? It’s people who have little money,” Szanton said. “Anything that we developers can do to build housing that’s affordable for them is a lifeline.”
For Portland-based real estate developer Nathan Szanton, creating new affordable housing is a mission.
Szanton’s company is halfway through the 18 months of construction of a four-story apartment complex in Bath called The Uptown.
It will have 60 apartments, and three-quarters of them will be set aside for low-income residents.
Szanton said in an interview, “If these were luxury condominiums, probably I could make a lot more money, but that’s not the business I’m in.”
Instead, The Szanton Company specializes in building affordable rentals in Southern Maine.
“I’ve always wanted to try to provide housing for a diversity of people, a diversity of incomes, and not just the top echelon,” Szanton said. “I think it helps make our society better if people who are struggling to find stable housing can find more if it. The people who are well-to-do have plenty of options.”
The Uptown will have mostly one-bedroom apartments and some two-bedrooms.
A 600-square foot one-bedroom will rent for $1,250 a month at market rate, and the affordable rate will be $950.
What “affordable” generally means is only people who earn up to 60% of an area’s median income can apply, and their rent is capped, so they pay no more than 30% of what they make.
Szanton said, “Experts on housing and finance say that a family or a household shouldn’t spend more than about 30% of their income on the combination of rent and utilities, or if you’re a homeowner, on a combination of a mortgage, insurance, and taxes.”
At Milliken Heights, Szanton’s new development in Old Orchard Beach, 40 of the 55 affordable one-bedroom units are rented, and it opened just one week ago.
Szanton relies on federal tax credits awarded when at least 60% of units are affordable. The credit goes to banks, who then give him cash to reduce the amount he must borrow.
Szanton said, “Without those financing programs, you can’t make the financing work and still charge low rents.”
In Bath, state historic rehabilitation tax credits spurred the project, as some apartments will be in a renovated 1893 YMCA building designed by renowned architect John Calvin Stevens.
“This was a vacant lot owned by the City of Bath. We had to convince the city to sell it to us,” Szanton said. “In Southern Maine, land prices have just shot up in the last 10 years or so, so finding a site that we can afford to buy, that’s in a good location where our residents can access the services that they need, is really a challenge.”
Szanton designated both The Uptown and Milliken Heights for residents 55-years-old and older.
Federal discrimination law allows a minimum age requirement to create affordable housing for senior citizens.
Szanton said of the Bath project, “We opted to make this 55-plus to reduce the number of cars that we’d likely have to accommodate, because our parking – we had less than one parking space per unit. So, we decided to feature older residents who are less likely to drive a lot of cars.”
Both developments are in walkable neighborhoods near amenities like grocery and hardware stores, libraries, and parks. The Old Orchard Beach project is also near a bus line.
“Because more people want to live in Southern Maine than we have dwelling units for them, prices just keep going up and up and up, and who gets hurt by that? It’s people who have little money,” Szanton said. “Anything that we developers can do to build housing that’s affordable for them is a lifeline.”
Experts say the economic slowdown and rising interest rates may stall investments by millennials in Indian real estate.
Global headwinds following the collapse of Silicon Valley Bank in the US will dent affordability in the commercial real estate sector, especially in IT hubs such as Bengaluru, experts said.
In the mid-segment residential sector, already grappling with rising home loan interest rates and layoffs, launches will be slower, they said.
“If the slowdown continues, we could see a low gross commercial absorption of as much as 30-33 million square feet. And this can potentially delay new residential launches already in the pipeline,” Sankey Prasad, chairman of Colliers India, told Moneycontrol. “However, the sector has the potential to recover if the slowdown does not last past June.”
Prasad explained that the SVB collapse will mostly impact the US-market-based technology sector and startups.
“This has primarily affected mortgage security, a problem that the US has always had. Several startups in India, especially in Bengaluru, have exposure to the US-based funds,” he said.
Companies that rely on foreign funds need to look for alternative investment opportunities, he added. Over the next few months, the impact will be visible in the US corporate landscape.
From an Indian perspective, Prasad said the commercial sector is largely dependent on external demand, with the tech sector the predominant driver for Indian offices.
SVB was the preferred bank for startups and venture capital firms. Regulators shut down SVB, which had $209 billion in assets at the end of 2022, on March 10 after a run on the lender. The Federal Deposit Insurance Corporation, which took over SVB, said depositors would get full access to their money starting March 13.
Prasad said companies, already grappling with a slowdown and rising interest rates, could further delay their real estate plans and thereby stall project launches. However, Prasad said the impact on Indian real estate would be short-lived.
“Less than 5 percent of Indian real estate companies rely on foreign funds. Thus, within 12 months, we can expect the sector to come back… We need to be conservative and cautious about our investments. For residential, the higher segment will be largely unaffected,” he added.
For the residential segment, Prasad added that it is too early to predict a shift in costs. However, affordability in the mid-segment bracket will take a major hit if the slowdown persists.
Since the pandemic, working from home has dented the commercial segment in major cities, according to Prasad.
“Though co-working reduces costs, major clients such as IT companies will always prefer their own spaces. Thus, as hybrid working normalises and we see more offices opening up, commercial demand will pick back up,” he said.
Prasad said with interest rates going up since May 2022, homebuyers are already struggling with loans. This is impacting the bottom of the mortgage pyramid and is not a healthy sign, he said.
According to the State Bank of India’s economic research department, for home loans of Rs 30 lakh, about 45 percent were dispersed in January and February, down from 60 percent a year earlier.
“This is impacting the decisions of millennials who are increasingly investing across real estate sectors in India. The new tax regime presented in the Union Budget 2023 may offer some relief. However, the residential sector will be impacted,” Prasad said.
Many A-grade developers are currently holding off launches as they wait and watch.
“Affordability is a challenge in city centres today, with land costs and construction costs soaring. Unless interest rates are corrected, we will continue to see spikes in costs,” he added.
However, Prasad added that compared to previous slowdowns, the real estate sector will not become stagnant.
“Currently, the market fundamentals are very strong. Opportunities in developing countries like India are unlimited and several private equity companies are already looking forward to coming to India in the second half of this year,” he said.
LEWES, Del. – A public workshop on March 21st is discussing potential solutions for the lack of affordable housing in Lewes.
The city says the the issue has been around for decades, and something needs to change.
The city says its hard to hire healthcare workers or first responders because of high rent and house prices.
“The property values have increased significantly,” said city manager Ann Marie Townshend. “Countywide, property values are increasing and everything that we are seeing countywide is even more so on this side of the county.”
Townshend says the city is considering changing code to allow for more accessory dwelling units. That way, property owners could build tiny houses or transform garages into cheaper and more centrally-located living options.
Some locals like Madison Wiggins, who works at the Mayumi Flower Shop on Second Street, says since she came home from college, she simply can’t afford to live anywhere on her own.
“Me and my friends, a lot of us are still living with our parents because that’s all we can afford, you know?” she said. “You want to get started on your life and feel grown up, and like you’re doing something, and it just feels like a total setback to still be with your parents.”
Discussions on affordable housing will continue with City Council members.
Our Valley, Our Future (OVOF) has shared information from the Washington state Department of Commerce projecting future housing needs over the next 20 years in Chelan and Douglas County. Statewide, the need has been estimated at 1 million housing units by 2044
Our Valley, Our Future coordinator Steve Maher broke the Commerce Dept. projections down based on “medium” population or “high” population growth in the two county region through 2044.
The numbers are eye-opening;
Current Population: 79,141
Projected population in 2044 assuming “medium” population growth over the next 20 years; 94, 098 (18.9% increase)
Projected population in 2044 assuming “high” population growth over the next 20 years: 116,636 (47.4% increase)
Current Population: 42,938
Projected population in 2044 assuming “medium” population growth over the next 20 years; 53,967 (25.7% increase)
Projected population in 2044 assuming “high” population growth over the next 20 years: 61,875 (44.1% increase)
Current Population: 99,123
Projected population in 2044 assuming “medium” population growth over the next 20 years; 127,647 (28.7% increase)
Projected population in 2044 assuming “high” population growth over the next 20 years: 148,879 (50.1% increase)
In an analysis of the numbers, Maher looked at the number of new homes Chelan and Douglas counties needs to catch up with their housing shortages.
Under “medium” population growth over the next 20 years, Chelan County would need 10,032 new homes by 2044 and Douglas County would need 6,775 new homes according to the state projections. If population growth is “high”, the number of new homes needed in Chelan County would rise to 19,843 and 10,105 in Douglas County by 2044
Chelan County has added an average of 343 new homes per year between 2000 and 2020 Douglas County has added 219 per year on average over the same time span. Those averages would have to increase to a minimum of 501 per year in Chelan County and 338 per year in Douglas County for 2024-2044 with a medium population growth rate and significantly higher if growth is faster.
In Grant County. “medium” population growth will require 17, 185 homes added in the next 20 years and 25, 868 if the growth rate is “high”
Housing prices have been a concern with many unable to afford to purchase a home in the Wenatchee real estate market with soaring prices in Leavenworth, Chelan and Wenatchee. Median prices in Wenatchee have hovered around $500K and higher in Chelan and Leavenworth
The Commerce Dept. figures indicate adding housing at market-rates will not be enough to meet the local demands, whether the population growth in Chelan and Douglas county is considered medium or high. Maher said the state projects between 40 and 55 percent of the new homes that are added over the next 20 years will need to be affordably priced for people earning under 80 percent of the area’s median income.
Maher says The “Regional Housing Approach” game changer in the OVOF Action Plan is guided by an ad hoc ‘Housing Solutions Group’ that is working to identify ways to generate more housing inventory for all residents. This year, the Housing Solutions Group will release a series of recommendations to add more housing for low-income and middle-income residents.
The Housing Solutions Group include representatives from Chelan County, the cities of Wenatchee, East Wenatchee and Leavenworth, the Wenatchee Valley Chamber of Commerce, owners of businesses that work in the housing industry, the Housing Authority of Chelan County and the City of Wenatchee, the Common Ground Community Housing Trust, Serve Wenatchee Valley, and Residents Coalition of Chelan County.
To learn more about Our Valley, Our Future
ondon’s outer fringes have seen a surge in homebuyer activity as lockdown leavers return to find the best of both worlds.
Market analysts Propcast found that the 10 hottest property markets across the capital last month were outside Zone 2, with buyers willing to accept longer commutes for countryside access and better-value housing than that found in inner London areas.
Incidentally, five areas where homes were least likely to sell were all within the tight inner-London confines of Zone 1.
Marc von Grundherr, managing director of estate agents Benham and Reeves, said many people who left the capital at the height of the Covid-19 crisis were looking to re-establish themselves without losing all the benefits of the commuter belt.
“The pandemic-inspired exodus of London buyers has been cooling for some time and it’s fair to say that the novelty has worn off, with this ripple effect of market activity now in reverse,” he said. “This has been driven by a return to normality, both socially and within the workplace, with many buyers now keen to return to the convenience that London living provides.
“Of course, while the current economic picture is far better than many predicted, the high cost of home ownership, along with the increased cost of borrowing, is still having an influence on where this interest is currently being focussed. As a result, it is the slightly more peripheral areas of the capital, particularly to the east, that are seeing the highest levels of market activity due to the more affordable property values they offer.”
London’s five hottest property markets
Percentage of listed properties sold or under offer in February 2023
Belvedere (DA18), in south-east London, had the highest proportion of listed properties under offer or sold in February, according to Propcast’s analysis.
Romford (RM7) and Dagenham (RM9) in east London had the next highest percentages of homes under offer or sold.
Fourteen areas saw increased buyer demand in February compared to January, including Chislehurst in south-east London and Greenford to the north-east of the capital.
Soho (W1) and the City of London (EC2) had the coldest markets last month, with up to nine in 10 listed properties not meeting with acceptable offers.
The five coldest property markets in the capital
Percentage of listed properties sold or under offer in February 2023
EC2, the City
SW7, South Kensington
EC4, St Paul’s
Matt Thompson, head of sales at Chestertons estate agency, said buyers had been adjusting their budgets amid the cost-of-living crisis.
“Many are therefore considering moving to London’s outer neighbourhoods which can present a good alternative to inner city locations,” he said. “What’s further driving demand for these areas are ongoing infrastructural investments such as the Elizabeth Line, which has vastly extended the search radius for some house hunters.”
Mellony Morgan, consultant at estate agents Harding Green, said the completion of Crossrail and extensions of the London Overground and Northern Line had boosted the appeal of some previously less connected districts.
Several postcodes south of the river, including Carshalton (SM5), Coulsdon (CR5) and Thamesmead (SE28) were rated as hot markets by Propcast in February.
“The property market in south-east London tends to get hotter because it usually offers more affordable housing than central London,” said Morgan.
“South-east London has a wide variety of amenities, such as Greenwich Park, Dulwich Park and Peckham Rye. Those in the know add demand for housing in the area and drive up prices, making it a desirable place to invest in property while still being affordable.”
Before she jump-started a more than two-decade career in commercial real estate banking, Maria Barry set her mark as a distance runner with the University of Connecticut women’s track and field program.
Barry, who has held the role as Bank of America’s community development banking (CDB) national executive since 2009, graduated from UConn as a school record-holder in the 1,500- and 3,000-meter events. Lately the Madison, Conn., native has been focused on running down financing packages for affordable housing projects nationally through a combination of debt and tax credit programs while also navigating challenging market conditions amid rising interest rates.
“The work is challenging and it is so rewarding,” said Barry, who prior to her 2009 promotion was CDB market executive for the Northeast. “There is nothing like when you get to attend a ribbon-cutting and you get to meet the residents who are moving in and you see the look on their face and just how grateful they are to live there.”
The CDB arm Barry runs supplied $7.85 billion in originations last year to surpass its previous record of $6.7 billion in 2021. It also marked the sixth consecutive year of record growth for the group.
Prior to joining Bank of America’s CDB business in 2004, just as the company was merging with Fleet Bank, Barry was part of a Fleet team that worked with small to midsize developers. She previously worked in Fleet’s commercial credit department leading Community Reinvestment Act (CRA) initiatives and chairing the bank’s Fair Lending Policy Committee.
Since joining Fleet’s commercial credit department in 1987 after a four-year accounting stint at Ernst & Young, Barry has seen a big rise in the number of women working in key banking roles, especially in the CRE space. She is active in trying to bring more women into executive CRE banking roles through LEAD for Women, an employee network at Bank of America, and Power of 10, a women’s leadership and mentoring program the company sponsors.
Barry, who is based in Providence, R.I., spoke with Commercial Observer on Feb. 28 about her journey into CRE banking, how the industry has changed for women, and the evolution of financing affordable housing projects since the early 2000s.
The interview has been edited for length and clarity.
Commercial Observer: You were a big track and cross-country star at UConn. How did that experience as a high-level Division I athlete influence where you are now in your career?
Maria Barry: I learned so much from being a Division I athlete for four years. I competed for 12 seasons at UConn in track and cross-country. It taught me to dream big as I accomplished so much more than I ever dreamed possible. I was a pretty good 800-meter runner, but by the time I left UConn I left with like several school records ranging in events from the 1,500 meters to many relays and the 3,000 meters, and I also was able to do training that was way beyond anything I thought I could have done when I started. I had incredible teammates who would take me on these long, long runs through the hills of Connecticut, and I was thinking, “I can’t believe we’re going to do this” as it seemed way beyond anything I could ever do. And then we would get through it together, and, of course, that made us stronger and faster.
I also learned a lot from the teamwork and leadership opportunities, as I was captain of both the track and cross-country teams. We worked so hard together and we won multiple New England and Big East championships during the time that I was there. You could really see all of the hard work and teamwork coming together at those championship meets. We were running different races, but we had the same goals.
Are you still an active runner?
I am. I tend to run more races for charity, so I have been running for Dana Farber Cancer Institute for the last couple of years. I’ve done the Falmouth [Mass.] road race and the half-marathon, and I also run 5Ks with my family. Both my children are runners, so it’s a family thing for us.
After graduating from UConn, you worked in accounting and had a four-year stint at Ernst & Young. What drove the shift into banking?
When I was at Ernst & Young I got great experience. Public accounting is a really great foundation for any business-related job, and I worked really hard and had a lot of responsibility right out of school in that role. I earned my CPA and then I decided I really wanted to broaden my experience, and I felt banking would let me do that. Even though when I joined the bank it was smaller, there were so many opportunities to learn. When I joined it felt like a really great place with so much opportunity to learn, grow, and try new things. I felt I would never get bored here, and that has definitely proven to be the case.
As we kick off Women’s History Month, how would you describe the makeup of women in commercial real estate banking today versus when you entered the industry in the early 2000s?
Generally there are more women in real estate and more women in leadership roles in banking than when I started. I’m one of four children, and I’m the only girl as I have three younger brothers; so that was a huge benefit for me when I started my career because I was sometimes the only female in the room, and I was very used to that growing up in a house of brothers. That was helpful because there weren’t as many women in the room back then as there are now. There’s a lot of support for bringing women into the industry and developing them, and I’m really encouraged.
What do you think can also be done to increase the number of female executives in commercial real estate banking? Are you involved with any initiatives on this end?
I’m a mentor to several women in the industry both within the bank and external. I’m also part of some leadership groups that are broader than just commercial real estate but they include women in commercial real estate. We have an initiative at the bank called Power of 10, and that is a group that started organically around 10 years ago where small groups of women get together on a monthly basis to share ideas while learning and supporting each other. It is really terrific and a great way for women to connect with each other; also to grow, share best practices, share ideas, and really help each other as they’re navigating their careers. I lead a Power of 10 group, and I’m part of the operating committee for Power of 10 across our firm. We have hundreds of groups all over the world.
We also have an initiative at the bank called LEAD for Women, and that is also focused on supporting and developing women. I’m the co-executive sponsor for LEAD in Rhode Island, and that’s another way that we’re really helping women in the industry grow and develop.
Going back to your early days in banking, how did Bank of America’s acquisition of Fleet in 2004 affect your affordable housing role with the community banking team?
I had a background in credit training in leading our CRA initiatives. I also have led our fair lending team and had a lot of exposure to our executive leadership team and our board of directors; and I had recently joined our commercial real estate team right around the time of the acquisition. So, based on my background, it was a natural fit and a really exciting opportunity for me to jump in and run our community development banking Northeast team. I was so grateful for that opportunity, and that led to the role that I’m currently in now.
How has financing for affordable housing projects evolved in your more than two decades in CRE banking?
The deals are larger, and I think a lot of that has to do with just trying to gain efficiencies in the whole development process. The capital stack for deals now is more complicated. There’s a variety of types of tax credits, there’s more mixed-income housing, and different types of subsidies are woven into the deal. And I would say there’s an additional level of complexity now on the financing side of it.
When I think back to when I first started in this business, there were areas that you could classify as blighted. Now there are fewer sites available, which can make it really challenging when we’re trying to identify a new affordable housing location for clients. And at times it can also impact the environmental component of the building because some of these properties were the last ones to get picked, so they might be a little bit more challenging in that regard. I also think deals take a little longer now especially with more recent supply chain challenges and challenges in getting enough contractors to be able to work on a project. The need for housing continues to be very high and is growing, but those are some of the changes I think I’ve seen over the last couple years I have been involved with the business.
You’re leading a new investment of up to $100 million in equity to preserve more than 3,000 affordable units nationwide for middle-income households. Why did you decide that now was the time to focus on the “missing middle”?
We had a couple of developments that included middle-income housing, and we started to think about how we could do more of this at scale. That’s how we came up with this idea in partnership with Enterprise Community Partners. Partnering with them was a natural fit for us. We’re hoping that this is just the beginning and that this will be a model for future funds to continue to preserve middle-income housing, maybe even potentially on a larger scale.
What are the biggest barriers now with bringing affordable housing projects to the finish line in America’s largest markets?
Escalating costs can be one of the biggest challenges whether it is materials or construction costs, and we’re still seeing supply chain challenges that are causing some delays as well. The good news, though, is I think we’re starting to see some signs that costs are starting to moderate a little bit, and supply chains are getting better. Our clients have really come up with some new strategies so they can put those in place to get ahead of ordering some of the more challenging items. The good news is we’re starting to see some resolution to a couple of these challenges.
How has the slowdown in the overall commercial real estate market amid rising interest rates affected your affordable housing goals?
We have a really strong pipeline so far in 2023. We remain committed to this business — that the need for housing just continues to grow. This is really a top priority at the federal, state and local levels so our commitment is very strong. We’re working closely with our clients to rework budgets, and our clients have some support from state and local agencies to help them solve some of the challenges that they run into. So we’re seeing a lot of deals moving forward. It’s a really great partnership, I think, with everyone really in the same direction and wanting to get the housing built.
Turning to New York City, which in many ways is the epicenter of commercial real estate. What is New York’s potential for future affordable housing development now that the city’s former 421a tax abatement program has expired?
The good news there is that New York City and the state have a really long history of creating really innovative programs to address the housing needs and the challenges that residents face across the region. So, I think, even though 421a has expired, we’re expecting to see alternative strategies that promote safe, sustainable, affordable housing going forward.
And we’re definitely seeing signals of a willingness to consider similar-type programs. Those discussions are ongoing, but we’re encouraged. New York has always been a leader in this space so we anticipate there’ll be other options to continue the momentum.
Lastly, in your CRE banking career you’ve experienced a lot of challenges between the Global Financial Crisis, the height of the COVID-19 pandemic, and now rising interest rates. From those experiences, would you say affordable housing has proven to be downturn-proof?
The need for housing continues to grow, and people who live in safe, affordable housing will work really hard to pay their rent, and they know that it would be really hard for them to find another place to live. So, once that community is built, we see a lot of strengths there in that people don’t want to leave. They have their friends there and their communities there, and they don’t want to face the prospect of not having a safe, affordable home. That in itself creates strength in the project and the development.
The underwriting of these developments is strong, so that there’s definitely reserves for unexpected challenges. As we talked about earlier, there’s a tremendous partnership with federal, state and local agencies, which also adds strength to the deals. And all of this combined demonstrates the strength of the business and how responsible the development is. That’s what’s enabled the business to withstand some of these really challenging economic times.
Andrew Coen can be reached at firstname.lastname@example.org.
If you’re looking for affordable housing in America, much of it is in majority-Black neighborhoods, thanks in large part to the legacy of structural racism. The average such home costs less than half the price of a house in areas where most people are non-Hispanic whites, which is one major driver of gentrification.
Why it matters: Black Americans have a higher proportion of their wealth tied up in home equity than their white counterparts, but the value of that home equity has been growing much more slowly.
- In 2019, per the Fed’s Survey of Consumer Finances, the average Black family had a net worth of $142,500, of which about $90,000, or 63%, was equity in the family’s primary residence.
- In comparison, the average non-Hispanic white family had a net worth of $983,400, of which $261,500, or 27%, was in the primary home.
By the numbers: Between 2012 and 2022, the average house in a majority-Black neighborhood grew in value by $122,500, per Redfin. For houses in neighborhoods where most of the inhabitants are non-Hispanic whites, the increase over the same period was $230,000.
The big picture: The U.S. gained about $13 trillion in housing equity between February 2020 — just before the pandemic — and December 2022. Most of that increase was seen in the suburbs, as opposed to urban areas.
- While urban housing in aggregate increased by $1.98 trillion in the three years to December 2022, suburban housing spiked in value by $7.46 trillion — almost four times as much.
- That helps explain the way in which Black homeowners are accumulating housing wealth more slowly than their white counterparts. 77% of majority-Black neighborhoods are in urban areas, compared with just 22% of neighborhoods where most owners are non-Hispanic whites.
Between the lines: It’s easy for those of us in big coastal cities to miss the broad facts of American housing. Urban homes in New York or Los Angeles are generally ludicrously expensive. Which helps explain why the average home in a majority-Asian neighborhood is $978,000 — most of those neighborhoods are in California. But such places aren’t representative of city homes broadly.
The bottom line: America’s suburbs — which are significantly whiter than America as a whole — are not only home to most of America’s housing wealth, but have also driven most of its recent rise.
Go deeper: Check out Axios’ Deep Dive on race and housing in America, and how home values and homeownership are a function of structural racism both past and present.
This story is part of The Salt Lake Tribune’s ongoing commitment to identify solutions to Utah’s biggest challenges through the work of the Innovation Lab.
Para leer este artículo en español, haz clic aquí.
It was a two bedroom, single bath home with a double carport. It cost $52,000.
Senate President Stuart Adams still clearly remembers the feeling of buying his first home in Layton, the city where he grew up.
“When you own your own home, something just happens,” Adams said. “It does something to you.”
Not too long ago, Utah served as a model for a type of stability other states strived for. In 2016, the think tank Brookings published an article declaring “The American middle-class is still thriving in Utah.”
Homeownership has long been thought of as a pillar of that thriving middle-class: the realization of the American dream.
“In America, we believe in homeownership,” Adams said. “And in Utah, we believe in homeownership.”
But for Utahns living on middle and lower incomes, homeownership is increasingly out of reach, Adams told members of the Senate Economic Development and Workforce Services Committee on Feb. 17. Adams worried Utah’s middle class might be disappearing.
And the numbers seem to back up Adams’ concerns — the Kem C. Gardner Policy Institute found more than 70% of Utah renters couldn’t afford the median price of a home in 2020. At the same time, Utah’s middle class is struggling just to afford rising rents in the state.
Adams wants to help people get out of their apartments and into homes to build wealth but also to “enjoy the pride of homeownership.”
Persistent questions when talk turns to Utah’s housing costs and availability revolve around the “how.” How can people afford that first home in this economy? How will costs ever come in line with average and lower incomes? How much can and should the government do to assist?
In his budget recommendation, Gov. Spencer Cox asked for continued funding of a first-time homebuyer program aimed at helping veterans and the creation of a new program specifically for educators and firefighters. Cox also called for a one time investment of $100 million for “deeply affordable housing.”
It may appear to be a tiny step, but SB 240, which Adams is sponsoring, aims to give first-time homebuyers a hand by providing a $20,000 loan to help with a down payment, closing costs, or buying down the interest rate. The loan could only be used for newly constructed homes, a move Adams hopes will incentivize the construction of more housing stock. Buyers would pay back the loan when they sell or refinance their home.
A start for a starter home?
The proposal received support from a broad range of individuals and interest groups that testified in favor of the bill, with one private citizen speaking against it.
“The starter home in Utah is extinct,” said Mike Ostermiller with the Utah Association of Realtors. “They don’t exist anymore.”
Building more affordable homes is the only way to fix that problem, Ostermiller told lawmakers, and he believed SB 240 would help. “So this will not only help families in a profound way but also will trickle down and help the rest of the economy.”
Karson Eilers, senior analyst for the Utah League of Cities and Towns, spoke in favor of the bill. The Utah Home Builders Association also supported the measure.
“Mainly I’m here to say thank you,” said Kael Weston, a former U.S. senate candidate. “I’m a card-carrying Democrat and I love when we find solutions like this.”
However, Weston said, he also hoped the bill would be “just the first step,” and urged lawmakers to “not forget about all the renters in our state. There are a lot of renters who are looking at 20% rent increases, they’re not looking at mortgage rates.”
“All the housing we can get”
Tara Rollins, executive director of the Utah Housing Coalition, similarly expressed a desire for the Legislature to “fund the continuum of housing,” but was in favor of the bill.
“We need it,” Rollins told The Tribune in an interview. “We need all the housing we can get.”
“Housing is healthcare. Housing is education,” Rollins said. “A child can’t learn unless they have a bed to sleep in.”
“I think a statewide first-time homebuyer assistance program is great,” said Maria Garciaz, executive director of NeighborWorks. The nonprofit organization has been providing homebuyer assistance for years.
Rising construction costs have made building affordable homes more difficult, Garciaz explained. At the same time, she’s hearing from more families that are paying rents equivalent to a down payment.
“When we first started doing this, it was only $5,000,” [for a down payment] Garciaz said. “So $20,000 is great but if it were more, that’s always the ideal thing for families.”
The city of Murray, for example, provides $30,000 down payment assistance grants with extra support for teachers and firefighters.
“What I like about this bill is it’s going to help those families that are middle-lower income,” Garciaz said. “Because the cost of housing continues to increase, I think this is a good first step that will help Utah families.”
The option to buy down interest rates could also be helpful as rates rise.
So far, lawmakers have agreed. Adams’ bill breezed through its committee hearing and passed the Senate on Feb. 22. The next step is the same process through the House.
“I’m really happy to see that it’s a nonpartisan issue of simply trying to help individuals and families get equity,” Adams said. Plus, he’s eager for more Utahns to experience the “pride and self-esteem” that comes with getting the keys to your own abode.
With affordable housing coffers shallow, Great Barrington might take a cut of real estate deals | Southern Berkshires
GREAT BARRINGTON — Town officials looking for money to solve a housing crisis are mulling whether the town should take a cut of real estate deals made by the rich and plunge it into various affordable housing needs.
But this proposed “real estate transfer fee” could also cut into the value of the sole nest eggs of the simply house-rich, say critics. They also think the fee could jack home prices up even further than they are as sellers try to recoup the fee in advance.
Those who want to study the idea say it’s too early to panic over these concerns. The proposal is in its infancy.
The Select Board and Planning Board want the concept vetted, along with a proposal for a tax break for landlords who rent for affordable rates year-round.
Both boards in a joint session last week voted unanimously to have the town examine these proposals. The ideas are just two of a long list made by a Housing Subcommittee made up of members from both boards.
They are considering a 0.5 percent and 2 percent that could be split by the buyer and seller or paid by either, according to a presentation by Select Board Vice Chair Leigh Davis, who is also chair of the Housing Subcommittee.
The fee could be applied, for instance, to sales of houses that are possibly 150 percent above the median sale price for single-family homes, Davis said.
Or, just for those over a certain sale price; like those that sell for more than $1 million.
Projections show the fees could yield between almost $300,000 a year to more than $600,000 a year, depending on the price level that triggers the fee.
For example, sales of homes $1 million and up accounted for roughly $14.5 million in property sales between the summer of 2021 and 2022, according to Davis’ presentation.
The fees also could be applied to second home sales, Davis said.
Not all transactions would trigger a fee; exemptions could include house sales within families, sales for affordable housing uses or sales of those who are struggling or “vulnerable.”
The fees would then be funneled into the coffers of the town’s Affordable Housing Trust Fund, which helps residents with housing in a variety of ways, including with making down payments.
While the trust fund receives money from the Community Preservation Act coffers — a combination of state and town taxpayer money that also goes towards paying for open space and historical preservation — as well as from new fees for vacation rentals, the fund needs more to make a dent in what is now a housing scarcity and cost crisis for many residents in the Berkshires.
The issue is particularly dire in South County, where second homes abound, and where a pandemic influx of people as well as a shaky economy put affordable housing out of reach for many.
As it turns out, the way people are paying for houses is one culprit. In Great Barrington last year, 45 percent of real estate deals were all-cash, according to a Washington Post analysis. In Lenox, it was 57 percent.
Davis said that of all the housing panel’s ideas, the fee is one of those that could take the longest to get rolling.
Officials will, however, be able to look to other towns and cities that have cut a path before them. Nantucket, Provincetown, Chatham and Somerville have already filed for a petition with the state for permission to impose a fee after voters approved it; Amherst and Northampton have plans in motion.
One next step is to get the opinion of residents. That’s likely to be a heated affair.
“You’re taxing people’s principal resource,” said Planning Board member Jonathan Hankin, an architect who also works in real estate. “All my equity is in my house.”
Hankin also wanted to know if the town will still impose the fee if someone is selling their home at a loss or is an elderly resident selling their only valuable asset to move into a nursing home. He suggested the affordable housing trust could ask for more money from the Community Preservation Act, and that this is a source of more housing money that is going untapped.
Housatonic resident Michelle Loubert suggested the fee might be a sneaky way to shift even more of the tax burden on homeowners. They are paying a surcharge for the Community Preservation Act on top of property taxes, as well as fees if they rent their homes on Airbnb-type sites, she said.
“Most of us, our nest egg is our home,” Loubert said. “I think enough’s enough.”
Planning Board and Housing Subcommittee member, Malcolm Fick, reminded everyone that the proposal is nowhere near being an actual policy.
“We’re really at the concept stage,” Fick said.
Local governments would gain the power to intervene in the sale of apartment buildings and other multi-family properties under a bill proposed at the state legislature this week.
The bill would give cities and counties the “right of first refusal” to buy those buildings when they go up for sale. The idea is to give cities a better chance to preserve existing lower-cost housing, said state Rep. Andrew Boesenecker, a Democrat sponsoring the bill.
“It really creates a fair chance for our local governments to be able to be competitive in this market against hedge funds or private equity firms that oftentimes buy up multi-family housing and (place residents in) a precarious situation,” he said in an interview.
Under the bill, a local government would be first in line to buy multifamily properties. As long as the city can match the value of the highest competing offer, it would get to purchase the property.
The city would be required to maintain the property as affordable housing for at least 50 years.
“Those protections, I think, really make it so that if there is a destabilizing event, be it a sale or a foreclosure even, that the local government can step in and preserve that affordable housing,” Boesenecker said.
How the bill would work
The change would apply to properties with five or more units in most areas, or three or more units in rural and resort areas. It also would apply to properties that had received affordable housing funds in the past.
If the owner wanted to sell such a building, they would have to notify the local government. The property then would be listed on the private market as usual, with the owners soliciting bids from all types of buyers.
Meanwhile, the city would have 14 business days to decide whether it’s interested in buying the property.
If the city did want to buy, it would have 90 business days to make an offer, and another 180 business days to match the value of the highest private offer and close the deal.
Developers and their allies oppose the bill
Development interests are objecting to the bill, warning that it would just create another obstacle to building housing. Deals could take months longer to complete if cities are allowed to intervene, said Drew Hamrick, senior vice president of government affairs for the Apartment Association of Metro Denver.
“It’s a problem,” Hamrick said. “Interest rates move dramatically in nine-and-a-half months. Nobody wants to do all the expensive due diligence (to buy a property) when they don’t know whether or not they’re going to be able to buy the place,” he said.
Hamrick added: “This will have a very chilling effect on all sales of multifamily and. more importantly, people’s willingness to come into this state and develop and build it.”
How the law could have helped one housing authority close a deal
Peter LiFari, the CEO of Maiker Housing Partners, the Adams County housing authority, gave an example of a recent transaction where the law could have helped him.
A 100-unit building had gone up for sale in the county. It was “naturally occurring” affordable housing, he said — an older building where rents had stayed relatively low.
A private bidder had offered $18 million. LiFari could only put together $14.5 million with debt financing. But if he’d had a few more months, he said, he could have applied for grants and loans from the state’s affordable housing sources, which have been expanded by hundreds of millions of dollars recently, including through Prop. 123.
The bill could preserve affordable housing “by slightly slowing the process” and giving cities time to access “the funds that Coloradans have voted for,” he said.
The bill helps make cities more competitive
Under the bill, the private buyers would still have an alternate option to still close a deal. If a private buyer is willing to provide similar affordable housing commitments as the local government, they could be allowed to buy the property instead.
Housing advocates argue that cities need help to compete in the property market. Often, large private buyers can make all-cash offers, and they can waive inspections — making their more attractive
City governments usually can’t make those kinds of sacrifices, which means they often lose out even if they make an offer of equal value, LiFari said. The bill would put public bodies on equal footing by requiring sellers to accept their offers, even if they’re using debt financing, LiFari argued.
If a local government used its right of first refusal, it would have to keep rent at the property below 80 percent of the area median income (AMI) in most places, or 120 percent of AMI in rural counties and 140 percent of AMI in resort counties. Those restrictions would stay in place for 50 to 100 years.
The bill doesn’t apply to sales and transfers between family members or through a will, among other exceptions.