With condos, agency expands ownership aid

Buying a single-family house in Seattle requires a lot of money. Janna Wachter doesn't have that.

Buying a condominium in the city also requires money, but often not as much.

To help Wachter and other first-time buyers with modest incomes afford homes inside the city, a nonprofit called Homestead Community Land Trust has tweaked its subsidy program to meet the harsh realities of Seattle's housing market. For the first time, it is offering subsidies not just to buyers of single-family houses, but also those purchasing condos.

By expanding its mission to include condos, Homestead is assuming greater financial and legal risk. The payoff, though, is that more buyers can take advantage of its assistance program.

"This change allows us to continue to be relevant within the housing density patterns of Seattle," said Sheldon Cooper, Homestead's executive director.

For Wachter and other Homestead clients such as Frank Video, a part-time city worker, the change makes buying a place in Seattle a possibility.

"The houses I've looked at have been the type that speculators would buy and flip, or tear-downs, but nothing I would want to live in," said Video, whose maximum price for a new home is $250,000. That includes a $105,000 Homestead subsidy, which functions like a grant that does not have to be repaid.

Homestead is another in a line of local affordable-housing programs that have had to adapt to a market in which affordable housing has gotten increasingly difficult to find. For example, Habitat for Humanity's affiliate in Seattle and South King County recently went beyond its long-standing approach of building single-family houses from the ground up, and is now also remodeling houses or building apartments for clients. Homestead's program is available to those earning less than 80 percent of median income. In King County last year, that amounted to $41,700 for an individual and $59,600 for a family of four.

Wachter, 53, a singer who recently formed a chamber group and performs in Europe, earns most of her income as a housekeeper and a gardener. "I have never made more than $40,000 in a year," she said.

Wachter was approved for a $54,000 loan, which Homestead is supplementing with a $100,000 subsidy. She is cobbling together the rest to buy a $176,000, 400-square-foot, top-floor studio at High Point, a new redevelopment in West Seattle. She'll move in this summer when it's done.

Homestead Community Land Trust


Background

Formed in 2000, the affordable-housing organization is funded through state, county and city sources, offering subsidies of up to $110,000 to first-time homebuyers in Seattle earning less than 80 percent of median income. Eleven houses have been purchased through Homestead with another 20 or so sales expected to close by this time next year.

How it works with single-family homes

Homestead owns the land beneath the house. To make sure the house remains affordable, it requires its client — the buyer — to sign a ground lease that restricts the resale to lower-income, first-time home buyers.

How it works with condos

Instead of a ground lease, buyers will sign an affordability covenant that gives first right of purchase to that same population of buyers.

More information: www.homesteadclt.org or 206-323-1227
The living room looks out on a grove of trees and a garden. The deck is big enough for a table and chairs.

"And everything is new," said Wachter, the first to buy a condo under Homestead's new program. "I'm the poster child."

Houses out of reach

The subsidy that Homestead offers — a maximum of $110,000 — increasingly can no longer fill the gap between what a client can afford to pay and the price of a single-family house in Seattle.

Homestead hopes to expand its client base to assist as many as 100 homebuyers a year by 2015, and Cooper said one way to meet that goal is to allow its clients to buy condos as well as houses.

Under the traditional land-trust model, a Homestead client buys a single-family house and Homestead owns the land beneath it. But that model doesn't work for condominium units, since there is no land for Homestead to own. The building's owner — not Homestead — is the landlord of the condo.

Homestead is thus requiring its condo buyers to sign an affordability covenant in which the owner agrees that when the unit is resold, it is offered first to buyers making less than 80 percent of median income. In any resale, condo owners would get back their original investment and a share of appreciation of the home, which is calculated on the amount of subsidy and the number of years the client owned the condo.

If the condo depreciates in value, Homestead — and not the condo owner — would take most if not all of the financial hit.

Since Homestead is not the landlord of the condo, the agency has fewer legal rights than it does with single-family houses for which it owns the land. Cooper said conflicts with condo owners — such as if the owner breaks the terms of the covenant — probably would have to be resolved through the courts.

A condo unit that has been converted from an apartment is not eligible for the Homestead program. Seattle housing-levy money helps fund the Homestead subsidy, and city policy does not allow that money to be spent on housing that has displaced renters.

$250,000 doesn't go far

That policy has limited the search for Frank Video, a 51-year-old visual artist who works 24 hours a week as a legislative assistant to City Council President Nick Licata.

Video has been looking for a condo since January and says he's discouraged to discover what $250,000 can buy. When he finds a nice place, like a couple of units he toured in Magnolia earlier this week, the location is just too inconvenient, given that he walks, takes the bus or bikes wherever he goes.

"I'm really searching for a sense of place," said Video, who lived many years in an apartment in Fremont that he helped remodel inside and out. "I had this really nice sense of ownership of that place, even though I didn't own it."

He said he doesn't have that in the apartment he's living in now.

Wachter, 53, raised her kids in a tiny rental house near Lincoln Park in West Seattle that she moved into 22 years ago. She has a new landlord, and although her monthly rent is a reasonable $825, there are rumors that the enclave of cottages will be torn down for something big and expensive. She doesn't want to wait out her fate.

"I've always been out of sync with how much houses cost," Wachter said. "And I've always said I never could afford to own."

At a party, a friend told her about Homestead and Wachter looked into it, intrigued at the idea of buying a house that she could live in for the rest of her life. She didn't make enough money — even with the assistance of a Homestead subsidy — to buy a house in the city. The worker at Homestead brought up the idea of buying a market-rate condo.

"I said, 'Eew! I've lived in a house for so long,' " said Wachter, who spent two years thinking about it. During that time, Homestead expanded its program to include condos.

"Over that time, I told myself that this is a window of opportunity that may not come again," she said.

"I had a chance to buy a house once 22 years ago for $30,000 and said, 'Oh no, I can't do that!' Well, I'm done saying that. I have an opportunity to do this. I can do this. I am doing it."

Stuart Eskenazi: 206-464-2293 or seskenazi@seattletimes.com

STEVE RINGMAN / THE SEATTLE TIMES