Lower- and middle-income residents struggling to buy a home are finding help in sometimes unusual ways as the price of housing keeps going through the roof in Western Washington.
With a median-priced home in Whatcom County now more than $340,000 – a 10 percent rise in just one year – some would-be homeowners are taking advantage of programs that provide down payment assistance, reduce costs associated with a loan, provide tax credits, let them put “sweat equity” into their home or offer unconventional options such as a trust where the buyer owns the home but not the land.
There’s no way we could afford to buy a home with the way things are going.
Nate Ashby, Self-Help Homes
“We usually say that we bridge the gap between what a low- to middle-income family can afford and what housing actually costs,” said Christina Olson, programs director for the Kulshan Community Land Trust. “We provide the down payment. They still need a mortgage.”
United Way’s 2015 ALICE Report showed that 41 percent of Whatcom County households fit the criteria for “asset-limited, income-constrained, employed” based on 2013 U.S. Census data showing the county’s annual median household income was $50,186. That’s less than the median household incomes in both Washington state ($58,405) and the U.S. ($52,250), and shows that some 17 percent of Whatcom County residents were living below the poverty line in 2013.
That United Way report also shows that 38 percent of Whatcom County families were forced to choose between paying rent or a mortgage and affording other basic needs. It’s only getting worse as incomes fail to keep pace with the price of housing.
“There’s no way we could afford to buy a home with the way things are going,” said Nate Ashby, who’s helping to build a home for his family – and homes for several of his future neighbors – through a program called Self-Help Homes managed by Whatcom-Skagit Housing.
Help with loan, down payment
Phil Jackson of Bellingham said he and his wife Chelsea felt lucky they were able to buy a home in the Columbia neighborhood about 18 months ago. Phil and Chelsea have full-time jobs and rented for several years as they saved for a down payment. They took a first-time homebuyers class at Whatcom Educational Credit Union that helped them learn about their options and provided a certificate they could use as a tax credit.
“It gave us a good return,” and helped ease the shock of new expenses related to home ownership, he said.
We don’t want to give people false hope.
Nicolas Longo, WECU
Nicolas Longo, a WECU loan-origination supervisor, said several programs offer breaks to qualified buyers who meet income-eligibility requirements, including grants that help with down payment assistance.
Programs such as Fannie Mae’s HomeStart and HomeStart Plus help with down payments and closing costs for residents who earn 80 percent to 50 percent less than their area’s median income. But applicants must still be employed and have good credit, Longo said.
“These are the challenges that we’re experiencing,” he said. “The price of housing is starting to get out of reach. But they still have to be able to afford a loan. We don’t want to give people false hope.”
Land trust pays it forward
Olson said Kulshan Community Land Trust was founded in 1999 in response to a late 1990s spike in local housing costs, one reminiscent of the recent trend. Its current inventory of homes is limited, but homes can be brought into the trust by a qualified buyer.
By retaining ownership of the land, a Kulshan CLT house remains affordable to the next qualified buyer when the house is sold – a process that Kulshan calls its “pay-it-forward” model.
The cost of land itself is just prohibitive for someone of low or moderate income.
John Moon, Habitat For Humanity
“We do maintain a waiting list, but some people go through it quickly,” Olson said. Currently none of the 120 homes in its inventory is available.
Funding for homes comes from several sources, including from the Bellingham housing levy, state Department of Commerce and Housing Finance Commission, or through a federal HUD program that requires buyers to help build their home.
Kulshan CLT’s current project is on Telegraph Road, where about five homes are planned annually over the next eight to 10 years with the help of Habitat For Humanity and its volunteers. The homes will be energy-efficient to save the new owners on the cost of light, heat and water.
“They’re bringing their strength and we’re bringing our strength,” Olson said. “We’ve partnered with Habitat for Humanity in the past and we thought that this would be a way to get help for people with more diverse incomes. We definitely don’t want to become a community of wealthy people.”
Habitat For Humanity aims to make homeowners of people who meet strict income-eligibility guidelines, but who can obtain and pay a mortgage, and who are willing to contribute 500 hours of labor toward their home or someone else’s.
“Especially in Bellingham, the cost of land itself is just prohibitive for someone of low or moderate income,” said John Moon, executive director of Habitat For Humanity in Whatcom County.
Habitat is also building a home in Acme, its 39th home – in 35 years – locally, Moon said. The group also helps secure mortgages for qualified applicants, who must earn less than 80 percent of the county’s median income and have lived in “substandard” housing for at least a year.
Moon said that could mean families who are without heat, electricity, or proper plumbing, or who live in dangerous neighborhoods, crowded conditions or are paying more than 50 percent of their income for housing.
“That’s a pretty high bar,” Moon said. “We usually work with those who are very low income, 30 to 50 percent of median.”
Habitat also helps prospective owners get down payment assistance. Often, all or some of those funds must be repaid at resale, Moon said.
Another “sweat-equity” program is offered by Whatcom-Skagit Housing, which has a Self-Help Homes program through the U.S. Department of Agriculture.
Like Kulshan CLT and Habitat, Whatcom-Skagit Housing combines private donations with local, state and federal grant money, and benefits from price breaks by hiring contractors to work on several nearby homes at once. Program participants help build their own home and the homes of up to 10 families that will be their neighbors.
Sarah Richards of Bellingham had all but given up hope of ever owning a home in Whatcom County when she heard about Self-Help Homes.
“When I found out about this program, I knew it was my only chance,” said Richards, a single mother who works a full-time job and has a 10-year son. She’s only a few months away from completing her dream home at Drayton Reach, a Whatcom-Skagit Housing project south of downtown Blaine.
Self-Help Homes organizes teams of qualified residents into teams who build each other’s houses, working a minimum 35 hours per week as part of their sweat equity commitment.
“We’re pretty unique in that the families have to do so much work,” said Nancy Larsen-Kolakowski, executive director of Whatcom-Skagit Housing. She said program participants must have a full-time job and be able to qualify for a mortgage. But they’ll be working at 35 hours a week for nearly a year on their home or one of their neighbors’ – in addition to their full-time job.
“It’s hard work,” Larsen-Kolakowski said. “I don’t know how some of these people do it. It’s a lot of dedication. But you end up owning a home.”
Two teams of future owners are working in a small development at Drayton Reach on the southern edge of Blaine. They’re there nights and weekends, along with volunteer workers that include family and friends. Grandparents watch young children while their parents work. Richards had to temporarily move in with her parents, sharing a room with her son in their basement.
Richards has made friends with another single mother on the Drayton Reach project, and the two offer each other support.
“We’re both very grateful,” said Akilah Price of Blaine, who has three young children.
Professionals are hired for jobs such as framing, electrical, plumbing and roofing. Program participants help during those times, and learn the basics of construction along the way. They hang doors, install windows, build floors and put up trusses, among other tasks.
“It’s kind of like the old barn-raising theory,” Larsen-Kolakowski said. “Everybody knows their neighbor really well. You develop a neighborhood, not just a house.”
Nate Ashby’s name was corrected on Sunday, August 27, 2017