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Real Estate - Residential

No Cost Like Home

By Cece Nunn, posted Oct 27, 2014
Suzanne Rogers (left), community development and housing planner for the City of Wilmington, stands with Linda Smith, executive director of AMEZ Housing Community Development Corp., at a home AMEZā€ˆbuilt at 1001 Hanover St. (Photo by Chris Brehmer)
A 1,400-square-foot home like the one an organization built at 1001 Hanover St. in downtown Wilmington would be too expensive to contemplate today, the group’s leader said.

Since AMEZ Housing Community Development Corp. finished the $130,000 house in 2006, construction costs have gone up, land prices have gone up and just tapping into sewer lines can cost nearly $10,000, said Linda Smith, the nonprofit CDC’s executive director.

“It’s kind of pricing a working person out of home ownership,” Smith said.

At the same time, state and federal funding for affordable housing projects has dwindled.

A state tax credit program that provided more than $50 million statewide in incentives to developers for the creation of affordable housing will expire at the end of this year, to be replaced by a $10 million loan program. Meanwhile, the shortage of affordable housing – defined as housing at a cost that does not exceed 30 percent of a household’s gross income –is a growing problem that could, some say, have negative effects on the economy’s growth.

More than 52 percent of all renter households and more than 30 percent of all homeowners in the Cape Fear region are paying more than 30 percent of their monthly incomes for housing, according to Housing and Urban Development data. 

“If we’re paying more for our housing, then we have less money to pay for other things, to put back in the local economy,” said Suzanne Rogers, community development and housing planner for the City of Wilmington.

Coming up with solutions is no easy task, officials say.

“I guess one of the first things is just to acknowledge that we might have a gap here, a growing gap between what it costs and what we can afford,” Rogers said.

But aside from a sudden dramatic increase in wages, potential solutions exist, officials said. There are examples of initiatives elsewhere that could alleviate the problem in the future, from creating new incentives for builders to private-public partnerships, and some programs are addressing the issue now.

Looking ahead

In the case of AMEZ, “we are trying to find ways to move forward through other grant and funding sources,” Smith said. “We are developing private and public partnerships with other organizations and private companies to try to combat the issue and be able to develop more houses than we have.

“We have some lots in our inventory, but we’re always looking because the need is so great.”
In some cases, local governments with property could donate or provide the land at a low cost to an organization like AMEZ to offset one of the greatest barriers to building a home in an affordable price range, Smith said.

Other municipalities in North Carolina use a variety of strategies. Raleigh, Rogers said, has an affordable housing bond about every five years, and Greensboro has a trust fund.
In Chapel Hill, some inclusionary zoning requires developers to devote a certain percentage of a project to affordable housing. But inclusionary housing, Smith said, has been a taboo subject in the Wilmington area.

One reason might be misperceptions about the word “affordable.” For example, some people believe “affordable” describes housing for people who don’t work, Rogers said.

“And that’s just not the case,” she said. “I think that’s kind of the biggest barrier we have to understanding affordable housing because it really affects a lot of people.”

Expensive land

Stephanie Norris, principal engineer with Spaulding & Norris PA, works with her parents, who have been developing affordable housing for 40 years, she said. They have other developments under way elsewhere in the state, but they want to do more in the Wilmington area.

Norris said the rising price of land in the city and county has taken its toll on the number of projects and their cost. 

“We’ve looked long and hard over the years for property in Wilmington,” Norris said. “It’s just hard to find because it’s expensive.”

As a result, some builders have continued to look for land outside New Hanover County, in Brunswick and Pender counties. That presents concerns about transportation because of the cost of traveling from outlying areas to Wilmington, the region’s major job center.

Realtor Jody Wainio said builder incentives could be the answer, but it will take collaboration with the entities involved. She said buyers could use more education.

“People need some kind of financial literacy training and discipline to be able to save that little bit of money they need” for a down payment, she said.

Tim Milam, president of Coldwell Banker Sea Coast Advantage, said he is optimistic that the numbers of first-time homebuyers will rise, especially over the next six to nine months.

“Getting a mortgage today is certainly not has hard as it is perceived to be by many in the public. I do believe with good credit you can still get a mortgage and you can still buy a home and have a great investment,” Milam said.

Current solutions

Sometimes combining resources is the answer.

One of Wainio’s clients, a single mother who works as a nursing assistant, had to employ that strategy to buy a house.

“That’s the only way that the lower income folks can really afford to buy is to piggyback all different kinds of programs together to be able to do a purchase,” said Wainio, who is also president of the Wilmington Regional Association of Realtors.

One of those programs was the City of Wilmington’s Home Ownership Pool or HOP program. Through HOP, a bank provides a first mortgage while the city provides a second mortgage at no interest to bring the total cost of a home down. The city had to stop taking applications for HOP for a short time, Rogers said, while the program’s guidelines were revised to coincide with changes in lending.

On Oct. 21, the Wilmington City Council was expected to adopt the updated bank agreements. But the city’s homebuyer education classes, held once a month and a requirement to participate in HOP, had restarted already.

Developers of Lockwood Village Apartments, a 60-unit apartment complex currently under construction at 4900 S. College Road, received a $540,000 tax credit from the N.C. Housing Finance Agency and $650,000 from the city of Wilmington for the project. But luck was also a factor in making Lockwood Village a reality, Norris said, because the land is close to a daycare provider and a variety of workplaces, including Wal-mart.

Despite a construction budget that has been tight, “we got probably even more lucky because we could make the numbers work even for a fairly pricey piece of property,” Norris said.

Still, even at the highest number they felt they could build in Lockwood Village, the complex “barely makes a dent in the need” in Wilmington, Norris said.
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