What may have looked like an attractive option during the real estate boom may now have lost some of its luster. Falling real estate values in Hailey are resulting in free-market home prices low enough to compete with deed-restricted homes set aside by the Blaine County Housing Authority as affordable housing.
Deed-restricted homes are typically offered at prices well below market value, yet the buyer is not allowed to see values appreciate more than 4 percent per year. The Blaine County Housing Authority was established to identify eligible buyers of affordable housing based on income.
Jim Fackrell, executive director of the Blaine County Housing Authority, suggested at a recent Hailey City Council meeting that homebuyers qualifying for deed-restricted, affordable housing are likely to purchase comparable, non-deed-restricted homes instead, in the hope that the market will rebound and they will see a profit.
"Tighter credit markets and stricter underwriting standards are definitely going to influence homebuyer choices," Fackrell said. "But if you had the choice of buying a home which was deed restricted and one which was not, and they were both the same price, which one would you choose?"
The asking prices for three three-bedroom, two-car garage homes designated as deed-restricted, affordable housing in the Woodside subdivision of Hailey have been reduced $20,000 each from $244,000 to $220,000. The homes have been on the market since 2006 and were recently listed by real estate agent Kris Halle of Windemere Real Estate. Halle says his listing of the homes marks the first time a real estate agent has been used to market affordable housing in Blaine County.
"Showings have increased," he said. "But the falling market has caused buyers to scrutinize these units more closely. There are similar homes on the same street with asking prices at $279,000."
Deed restrictions were established by Blaine County ordinance two years ago. They require that 20 percent of new lots in county subdivisions be set aside to establish a separate market for workforce housing—one that would be protected from the otherwise sky-rocketing real estate prices in the valley. Now those two markets are approaching one another in price, causing the county to reassess its plans to provide affordable housing.
"These homes were only allowed to increase in value 4 percent per year or the rate of the consumer price index, whichever was less," said Halle, who has been a real estate agent in Blaine County since 1993. "What does the consumer price index have to do with anything in Blaine County?"
Halle said new homebuyers are turned off by the complexities in the 12-page sales contract provided by the Blaine County Housing Authority. He also said buyers know they can take more time to make a decision in today's market.
"There has been some aggressive price-cutting after 10 years in which the seller was king," he said. "Now they have to be more flexible in order to sell their homes."
The three homes Halle is selling were provided to the Blaine County Housing Authority for management in 2006 by David Alexander, the developer of Croy Creek Ranch, a 34-home subdivision planned for a site five miles into Croy Canyon west of Hailey. The development passed county approval in early 2006, requiring Alexander, under the county's Inclusionary Subdivision Ordinance, to provide the affordable homes. Alexander negotiated to place them off-site in Hailey's Woodside subdivision, rather than within the upscale Croy Creek Ranch subdivision. Yet the affordable homes never sold, despite the fact that the developer continues to offer $10,000 to buyers to help cover down payments or closing costs.
Many who urgently need to sell their homes are finding no buyers and resorting to foreclosure proceedings instead. Sun Valley Title Co. President Manager Cassie Jones reported a "dramatic increase" in foreclosure notices in the valley compared to last year.
"In April of 2007, we listed three homes in foreclosure. This week we have fifty," she said. "These homes may sell, but the owner will lose any equity they may have in the home."
Fackrell said he is expecting changes to the county's Inclusionary Subdivision Ordinance in coming weeks to include a provision to identify pre-owned homes in Hailey as deed-restricted homes. Previously, the county only designated newly built homes and apartments as options for the Blaine Ketchum Housing Authority's deed-restricted offerings. He also said he expects median-income eligibility requirements to be reduced to locate more buyers of affordable housing.
While falling home prices may signify changes for the Blaine County Housing Authority and for real estate agents in general, new homebuyers are seeing more options.
"On the flip side of this, if someone has good credit and stable employment, there are attractive 30-year mortgage rates now, with the interest rate around 5 percent," Fackrell said.