ON ARCHITECTURE- Western migration? 'Workforce' funds might slow the exodus

One of the cruel ironies of Charlottesville's booming real estate market over the last decade is that the people who keep the popular city humming−nurses, teachers, firefighters, police officers, administrators, and other public and private community servants−can't afford to live here. 

The median sales price for a house in the City is around $250,000 these days, and nearly 50 percent of City renters pay more than 30 percent of their income for rent. Meanwhile, despite the rising cost of housing, wages in the area have barely budged (while living-wage proponents have been handcuffed and jailed)– the median family income in the city is still slightly below the national average at $45,486, and over $30,000 below Virginia's state average, according to the U.S. Census Bureau.

To make matters worse, the statistics tell only part of the story. As anyone who has lived and worked here for a while knows, $250K doesn't buy much in the city, and a working class family is lucky to bring in $45,000 a year.

There's no easy answer to affordable housing. After all, how do you control a free market? People want to live here, it's a small place, developers are in business to make a profit, and homesellers want to get what the market will allow.

As a colleague recently joked to local real estate agent and blogger Jim Duncan, "Waynesboro is Charlottesville's answer to affordable housing."

"Yes, he was joking," says Duncan, "but he also had a point. Everything's about $50,000 cheaper, and it's not that far away."

Still, Duncan recognizes the need for affordable housing closer to home, especially for people who work here and aren't needy enough to qualify for federal financing assistance. One answer, he and others believe, is the development of "workforce" housing funds like the one the Charlottesville Area Association of Realtors (CAAR) established in 2004.

CAAR's Work Force Housing fund offers no-interest, no-payment loans to qualified first-time home-buying teachers, nurses, police officers, and fire fighters who can't afford a house in the area where they live. But here's the catch: When they sell their home, the loan is returned to the fund and a percentage of the equity earned is placed in the fund to assist the next round of first-time home-buyers. 

For example, if first-time buyers qualify for a $160,000 mortgage, and the only suitable house they can find is $180,000, the fund lends them the $20,000 shortfall. The home-buyers pay no interest and make no payments on the loan while they own the house, but when they sell, the fund gets the loan back plus a percentage of the equity earned that's equal to the percentage loaned. 

Essentially, you pay back the loan with the appreciation. And even if the pace of appreciation slows down, you're paying only a fixed percentage of the equity earned.

Duncan says he has used the CAAR fund to help several working people buy homes. "My clients said it changed their life, that they couldn't have afforded a home without the fund," he says proudly.

"Putting money back into the fund was key to our program," says CAAR CEO Dave Phillips. "It's not a gift. They have to pay it back so more people can be helped down the road."

That's the idea behind a new workforce housing fund launched last week on the steps of the Venable School. On Thursday, September 28 the Peidmont Housing Alliance−in association with the Charlottesville Regional Chamber of Commerce, CAAR, and the City of Charlottesville−announced the formation of the Thomas Jefferson Community Workforce Housing Fund, a kind of über workforce fund based on CAAR's model.

"This was a dream of ours, that it would grow beyond CAAR," says Phillips. "They can help more people than we could with our fund."

"I think this is awesome," says Duncan about the launch of the new fund. "They're going to be able to tap into many more resources than CAAR could."

TJ fund chair Cheri Lewis says the organization hopes to make its first loan by the end of the year and raise $10 million in the next five years. Lewis says the City and County have each already contributed a quarter-million dollars each to the fund.

"The CAAR program was tailored more toward traditional workplace people− firefighters, policeman, teachers−" says Lewis. "Ours will benefit anybody in the workforce−construction and restaurant workers, even reporters−anybody who can't afford to buy a home in their area."

Lewis, who compares the launch of the fund to launching a ship for an extended voyage, says she wants the fund to be around for a long time.

"We're bascially bringing together a network of people to help plug the affordability gap," says Lewis, "which has grown and grown during the last several years, while wages in the area have not really grown at all."

Recent market trends may also be helping to plug the gap.

According to CAAR's second quarter 2006 real estate market analysis, the glut of available houses for sale (2669 listings compared to 1368 last year) has helped keep the median sales price for a house in the city the same as it was last year. In addition, there's been an "explosion" of condo sales in the last year (133 compared to an average of 30 to 40 over the previous several years), which pushed home sales for the quarter up over 80 percent in a supposedly slow real estate market. 

"While some of the new condos are higher priced luxury units designed for aging baby-boomers looking for a low maintenance lifestyle," says the CAAR analysis, "most are affordable units being snapped up by investors, first-time home buyers, and members of the Charlottesville workforce."

Maybe there's an alternative to Waynesboro after all.

A new "workforce" housing fund chose Venable School as the launch site last week, spotlighting the teachers, administrators, custodians, and cafeteria aides who work at the school, and who will benefit from the fund.