It’s not surprising that owners of some of Denver’s affordable housing units are having trouble selling in this economy.
What is surprising is that there is any suggestion that the rules of the game ought to be modified because some homeowners didn’t foresee a change in economic conditions and their own circumstances.
That’s exactly the kind of government finagling that infuriates the public, and for good reason. It’s an extension of the bailout mentality, and people who play by the rules, pay their taxes and save for retirement are sick of it.
The situation with affordable housing in Denver was explained in a story by Christopher N. Osher in Tuesday’s Post. Apparently, there is a notable number of complaints from people in Denver who are trying to sell in-town housing units they bought at bargain basement prices.
They got a great deal because the city passed an affordable housing ordinance in 2002 that required developers who built 30 or more housing units to set aside 10 percent as affordable, owner-occupied units or pay an opt-out fee. These units were reserved for lower-income people.
Part of the deal — clearly spelled out at the front end — was that if they were to sell the units, they’d have to sell them to people who qualify by income. And there is a formula to calculate the sales price that restricts rapid escalation.
Make no mistake: It’s a good economic deal if you qualify. A couple whose story was explained in Osher’s article paid $167,500 in 2007 for a three-bedroom, two-bath townhome in Northeast Denver.
But they, and others, can’t find buyers who qualify to purchase the unit given the tightening of the mortgage market.
We know that the current owners could not have foreseen what was going to happen to the mortgage market — that a worldwide meltdown would result in higher down-payment requirements and stricter rules about income. But an entire swath of the real estate market has been hurt by these developments as well. Other people who want to sell their homes are stuck because buyers can’t get loans.
The tightening of the mortgage market is actually a good thing, considering that the days of easy money were a big part of what led to the economic meltdown. We need a national adjustment on this front.
We hope that city officials, who are holding a public hearing to explore this issue, keep in mind the broader implications of any changes to the rules they may contemplate.
These are tough times for many people. Given the scarcity of jobs and the difficult financial times, we think the need for affordable housing is just as great as it always had been. We would hate to see the city compromise its affordable housing mission to accommodate a necessary — and healthy — shift in economic conditions.
