As Austin faces a housing affordability crisis, Habitat for Humanity is giving qualifying families a new way to become a homeowner.
In an East Austin neighborhood off Loyola, construction is underway on what will soon be 67 new homes; a familiar site in our booming town. The families that fill each home may have a different appreciation for the roof over their head because one of the qualifications to own one of the 67 homes is to help build it.
“This will be the largest community land trust in the state of Texas,” said Wayne Gerami of Austin Habitat for Humanity.
He said the qualifications to live in the neighborhood are that families need to make 80% below the median family income; that would be about $60,000 for a family of four. Families would also have to put in 300 work hours; 150 on their own and 150 on other’s homes. This is what Habitat calls “sweat equity.”
In Austin, the median home price is over $300,000 dollars. The first family in the new east Austin neighborhood will pay $150,000 for a three-bedroom home.
Habitat is able to have this program thanks to an affordable homeowner program called a community land trust.
A community land trust organization “builds or rehabs housing and then sells the home to an income-eligible family while holding onto ownership of the land. The land is leased to the family for a low, monthly fee, for example $25 per month,” said Eliza Platts-Mills, associate professor at the University of Texas.
The homeowners would pay taxes in full on the house but on the land, the $25 includes taxes on the leasehold value.
Eliza said Community land trusts are growing in interest across the state but the biggest need right now is for Texas mortgage lenders to participate and take part in the program.
“CLT mortgage loans are safe investments because although the homeowner is only taking out a mortgage for the resale restricted price of the home the mortgage is secured by the unrestricted market price of the home and the land,” said Eliza. “Fannie Mae buys CLT mortgages and has a required CLT Rider that is recorded along with the ground lease.”
Gerami says moving a family-in-need into a CLT home sometimes helps break a cycle of poverty.
“They're able to go back to school, and get their degree and put their kids through school we've just seen entire families change by virtues of owning a home,” said Gerami.