SAFETY HARBOR — In the Tampa Bay area, getting a start on the American dream can be tough for families in the middle.
Banks appear eager to write mortgages for a $1 million condominium for the buyer with impeccable credit, but the modest $90,000 home – if it can be found – is much less attractive.
For Lauren and Julio Lopez, living with parents for a season to save for a down payment was simple enough.
Finding a quality home that would keep their mortgage payment affordable, in the $900 per month range, was the hard part.
They spent a year looking at dozens of older homes throughout Pinellas County, but all were either priced too high or in such disrepair that the renovations and maintenance would likely outstrip their budget.
With a 2-year-old son and middle-income jobs in the cruise ship and freight logistics industries, the couple’s aspiration of home ownership was looking more like a dream.
“That just is becoming much more unreachable in this day and age because the way houses are priced and the way incomes have not gone up along with the housing market,” Lauren Lopez said.
Then they discovered the perfect home: a 3-bedroom 2-bath, renovated 1959 block home just down the street from downtown Safety Harbor.
The price was right, everything was redone and ready for move in. The only catch was they wouldn’t own the land.
The Lopezes are among 27 families in Pinellas County that have embraced a housing program that trades the short-term profits of equity for long-term affordability.
An offshoot of the county’s Housing Finance Authority, the non-profit Bright Community Trust buys old homes, lots and dilapidated apartment buildings in order to keep them below market rates, regardless of whether home prices inflate.
Buyers with income near or below the county’s median household income — that’s around $45,000 a year — get a chance to the purchase a brand new or renovated home, but the land underneath it remains property of the trust.
When the homeowner sells, they’ll get a portion of the home’s improved value, but the trust will reset the sale price to ensure it’s attainable for another family.
That means the Lopez family won’t see huge profits, but the lowered cost of living — which includes ongoing counsel and support from the trust — will enable them to save more in the long-run should they decide to one day move up the housing ladder.
Lauren Lopez calls it “sustainable” home ownership.
“It’s affordable now to us at our income level and it’s going to stay that way,” said Lopez, who moved in last month.
Many lenders treated the land trust concept with suspicion at first as charitable groups like Bright Community Trust began to crop up across Florida in the past decade.
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When Marcia Barry-Smith first emigrated from Jamaica to South Florida, she worked toward the American home ownership dream the old fashioned way: by getting into a small, inexpensive home and using the equity to gradually build wealth and move into a nicer home.
As a senior vice president of a major Fort Lauderdale bank, her career focused on helping others in low-income brackets follow the same path.
A land trust, where a buyer wouldn’t fully reap the rewards of their home’s rising value or even own their entire property seemed to remove the cornerstone from this tried-and-true method for mobility, she said at a recent land trust conference at the Pinellas Realtor Organization in Clearwater.
“I stomped through Broward County. I spoke to everyone who would listen,” Barry-Smith said.
“Wealth building for the person of modest means is now being taken away from them. This is not fair.”
What she and leaders in Pinellas County came to realize during the housing bubble was the homes that were being subsidized for low and middle-income families were rising in value so quickly that the stock of homes at “affordable” prices was disappearing.
At the time, some people would get financial assistance to buy a home, pay it back when they sold their house shortly after and then use the excess profits to put a down payment on a much more expensive home they truly couldn’t afford, she said.
When the dust settled from the crash, proponents of the community land trust model rolled out impressive foreclosure rates, a tiny fraction compared with typical home sales in the same price range.
Land trusts work with homeowners to ensure they can afford to keep up with maintenance and don’t fall into financial trouble.
If the owner does default, which is rare, the trust will either buy back the home or the bank can take possession and resell it at market values.
Those numbers made a convert out of Barry-Smith and she now travels the state looking to convince more lenders to look at land trust homes as a safe investment.
She’s convinced it’s the best way to ensure there will still be homes in the future for those without deep pockets.
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Facing an alarming shortage of affordable homes in the throes of the 2008 recession, the Pinellas County Board of Commissioners turned its federal and state housing funds toward the land trust model.
“We were losing it [affordable housing] faster than we could get it,” said Anthony Jones, CEO of Bright Community Trust and former director of the county housing finance authority.
Using funds from the State Housing Initiatives Program and other sources, the trust has purchased several hundred homes, apartment buildings and vacant lots preserved for affordable housing.
The non-profit, which broke away from the county last fall, has 27 families in renovated homes, seven on the market, and dozens more at various stages of construction.
The trust has also developed more than 500 price-controlled multifamily properties and rental homes.
As Florida has regained its economic footing, the largest housing budget in seven years of $167 million should help land trusts across the state build and renovate even more homes, said Jaimie Ross, director of the Florida Housing Coalition.
In Pinellas, the most built-out county in the state, a glut of old, deteriorating housing stock makes private redevelopment cost prohibitive in some places and many newly constructed homes and rental apartments are maximizing profits with high rents.
That means some manner of government support will be necessary to support the work of the land trust, although the goal over time is to make the program increasingly self-sustaining.
“There’s always going to be a need to find some sort of capital to do the projects,” said Sherri Harris, chief operating officer for the trust.
“That subsidy is needed initially to make the home affordable but then we can stretch it over the next several buyers.”
Lauren Lopez says she has no intention of moving out any time soon, but if they do one day decide to move on, she’s glad to know the home’s modest pricing will be preserved for another young family.
“It makes us feel really good to know we can pass this on,” she said.