Wednesday, July 9, 2008

Affordable Housing in Mueller Airport Development


"The new Mueller Foundation gave the couple an interest-free, no-payment second mortgage to cover the $55,000 difference between the $165,000 they paid and the market value of the house. When the couple eventually sell the house, they will have to repay that loan plus share part of any profit with the foundation to help future buyers with below-average incomes. Those include first-time buyers, teachers and retirees who otherwise would not be able to afford a Mueller house."
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This housing development is located at the old airport near 51st and Airport in North/East Austin. The thing that makes this development different than others is that they have formed a foundation that assists people that would like to purchase a home but they can not afford to live in a central location in the city. The foundation helps to keep homes affordable in the way of a no interest second mortgage. Here is an example of how it works, if the market value of the home is $200,000 and the home buyer gets a loan for $150,000, the foundation gives them a second no interest loan for the additional $50,000. If in a few years, the home is sold for $300,000 the buyers pay back the original $50,000 and a portion of the profit made. In this case, the home owner would retain $75,000 and the development would receive an additional $25,000. The home buyers will have an affordable monthly payment and when the home is later sold, the development makes their money back in addition to a portion of the profit. The foundation then uses a portion of that profit to continue to offer affordable housing for future home buyers.

25% of the homes, apartments, and condominiums within Mueller are available as affordable housing. Home buyers must make 80 percent or less of the area's median family income, which is currently $56,900 for a family of four. The affordable homes are sprinkled throughout the development and are similar to the market value homes but may have different options included.

This is a great way to help someone that would like to be a homeowner and qualifies for this program. In today's economy, I speak with a lot of prospective home buyers with a decent salary and good credit but can not really afford the payment of a house that is centrally located. On one hand the home buyer is giving up part of the potential profit they could make while owning the home but they would probably not be able to afford to live there otherwise. It will be interesting to see what happens in the future of this development. What do you think?

2 comments:

  1. I think you're spot on Brian. If the city is not planned with centrally located key workers and low income workers in mind, then the economy will suffer in the long term.

    As a Mueller resident and Realtor, I welcome the income diversity and affordable housing.

    I really like the geographically mixed in approach, rather than the traditional approach of putting low income houses in one area and higher income houses in another. This is still happening just down the road - we hear about in the upcoming changes for "homeless housing" at Manor and Sweeney - just 2 miles from Mueller.

    Garreth Wilcock - Mueller's Resident REALTOR

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  2. Yeah Garreth, I definitly think you are correct about the fact that if there is no housing centrally located then low income workers are forced to live in outlying areas and will most likely seek out work that is nearby that area which in turn raises the cost of running a centrally located buisness and most city jobs which in turn hurts the cities economy to some degree. I also like the fact that it is mixed because there are definitly other areas in Austin that have not seen the growth in their local real estate market as much as others because they were "low income" areas from the begining and they have continued to be just that. Thanks for the comment!

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