Was there ever an “affordable housing” program that actually worked? I am not aware of any. Let’s take a look a recent affordable housing plan that has gone completely awry. The Monterey County Herald is reporting Developers of affordable Salinas housing seek change in rules.

The Commons at Rogge Road was to be the model for providing low-cost homes and apartments for people priced out of a superheated Monterey County housing market. The project — 171 homes and apartments on 12 acres just outside Salinas to the northeast — was praised at every juncture as it made its way through the approval process to its March 2006 unanimous blessing by Monterey County supervisors.

The Commons was the first project brought forth under a county program to give builders incentives — more units, fee waivers, less required parking — to build below-market housing. And praise gushed forth from public officials, housing advocates and others for Chapin’s vision.

A great project, they said. Thinking outside the box.

Today, the first 46 homes in the phased development are empty. They have been on the market since August. Not one has been sold.

And the developers — Chapin and Woodman Development — are seeking changes to the original deal designed to ensure affordability of the homes and apartments. They want the changes just to sell the homes, complete the project and avoid big losses.

The plan originally was to sell the homes to income-qualified buyers — families making up to 180 percent of median county income — for $273,553 to $483,517. Silva said they’ve cut prices by up to $84,000 to lure buyers, but to no avail.

Those one-time affordable prices — up to $300,000 below what some homes in North Salinas were selling for a couple years ago — are now bobbing on the wave of a deflated housing market, where new or foreclosed homes in the same area may be going for the same price or less, he said.

Another condition, which Chapin voluntarily put on the homes to ensure they would remain affordable for many years, has added to the developers’ woes as housing values have plummeted. As a resale condition, homebuyers in The Commons would have to share their equity for 20 years with an affordable housing trust.

Buyers can now find homes in the same price ranges without those kinds of strings attached. The resale restriction is radioactive. “No discerning buyer in their right mind is going to buy our house, as nice as they are, with a 20-year deed restriction,” Silva said.

Another problem is that some would-be buyers, who may have been able to get a home loan a couple of years ago, can’t qualify today, as the credit market has been screwed tight. Other potential buyers — nurses, public safety officers and other “essential workers” for which the project was tailored — can qualify for loans, but they make too much money to fit the program’s income cap, Silva said.

Last week, the five county supervisors held a brief hearing and gave their blessing to Chapin’s application for $6 million in tax-exempt bond financing for affordable housing to complete the apartments. There were no questions asked or public testimony.

After the vote, Supervisor Fernando Armenta offered the latest words of praise for The Commons. He said the project will be “a great addition” and represents “the way to take care of affordable housing.”

The best way to ensure affordable housing is to stop promoting affordable housing plans, end government sponsorship of the GSEs, Eliminate HUD, stop promoting the ownership society, and in general just let the free market work.

Mike “Mish” Shedlock
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