Hundreds of people bought into affordable housing, without knowing it.
on Tuesday, April 10th, 2018 at 5:08pm.
Denver's Affordable Housing Program
The 2002 Inclusionary Housing Ordinance requires that all for-sale housing projects over 30 units set aside 10 percent of units for income-qualified buyers. Nearly a quarter of the 1,302 homes primarily in Green Valley Ranch, Stapleton and Lowry were not properly transferred recently coming to light. Almost 200 of these "affordable homes" are now in the hands of owners whose income eligibility wasn’t verified, and who likely paid market prices. The city is demanded they come into compliance with the rules of the program, which would mean selling these homes at a loss for many owners who unknowing purchase homes with these restrictions.
Who's to blame?
Real Estate Professionals? - Unless disclosured by the seller or title company, there is no way for a real estate agent to know if homes are part of the affordable housing program. The city doesn't even have a guide for professionals or homeowners to check! 9News put together this guide which helps you through a consuming nine step process to check if your home is part of the affordable housing program.
Title Companies? - The city set up the Affordable Housing Program to be transferred by covenants. The title companies general excludes coverage for anything covenant related under the "exclusions" and it is extremely difficult for a lay person let alone a real estate professional to understand the fine print in these policies. In fact, if the real estate broker was aware that such a restriction existed in the title insurance policy, these are material matter appropriately referred to an attorney. They are beyond the scope of a real estate brokers expertise. If title insurance policy entirely missed the affordable housing program even in the exclusions that could trigger coverage for homeowners and leave the title company at fault.
The City of Denver? - The city did a poor job setting up the program with the proper checks and balances that would trigger sellers, buyers, real estate professionals, and title companies to know what properties are apart of the affordable housing program. The city left enforcement of it's program up to sellers requiring them to sell the homes at a controlled price to a qualified buyer. However, disclosure clearly did not align with the homeowners best interest when it dramatically decreased their profits. It is the city's responsibility to ensure compliance with the rules of the 2002 Inclusionary Housing Ordinance they established. They blame the lack of oversight on the Great Recession, which prompted massive city budget cuts from 2009 through 2012. 2002 Inclusionary Housing Ordinance has since been replaced a new Inclusionary Housing Ordinance passed in 2017 that is funded by a property tax and development impact fees that apply to building projects.
My Advice - Avoid all "affordable housing" offered through the city. Real estate is an investment, the best investment you can make. The city's program keeps poor people poor. You have to make under a certain amount to qualify to purchase these homes and your appreciation is capped at 3.5% per year. This oversight is exposing how this program keeps residents from enjoying the benefits of appreciating asset. The man at the center of this story has a home with a market value of $328K, but due to the restrictions in the program the house can sell for a maximum of $282K. If the system was properly in place, that means the person who qualified to buy "affordable" would have missed out on $46,000 of appreciation that his higher income neighbor would pocket when selling the same property.
If you want to learn more, or if you're interested in hearing more about what I have learned about this issue, please contact me.