Affordable Housing: Not Your Father’s Starter Home

As towns struggle to meet the state-wide goal of 10% affordable housing, there is much confusion over what the term “affordable housing” means.  A house that the average wage-earner can afford to buy does not meet the legal definition of affordable housing.

To qualify by law, the house must:

1.    be government subsidized

2.    be sold to someone whose annual income is within specified guidelines (currently a household income of $86,500 qualifies a family of 4)

3.    require no more than 30% of income for payment of mortgage, taxes, and insurance (currently, 30% of an $86,500 income allows a $325,000 house)

4.    be deed-restricted for re-sale only through the RI Affordable Housing Authority, for a period of 30 years.

During the past 2 calendar years 156 homes were sold in Charlestown, half of those below $313,000 (the median price).  About a third of the homes were sold below $271,000, which is the allowable purchase price by the RI Affordable Housing Authority for a family of 4 earning the median household income of $72,100.  Although the buyers largely meet the eligible income and price guidelines for affordable housing (about 70% of Charlestown households do), these unsubsidized homes do not meet the legal definition of affordable housing.  They are not counted toward the town’s inventory of affordable housing.  That’s the rub.

George Tremblay –  The author is a member of the Charlestown Planning Commission