Land Trusts Help Lower-Income Buyers Afford South Florida Homes

Venice Cobb in a single mother. She supports three children on a city employee’s salary. With soaring home prices in Delray Beach and South Florida, she’s had the same difficultly finding affordable Florida housing as many others in similar situations.

Her chances of becoming a homeowner seemed so bleak that she even contemplated moving her family out of state a few months ago.

Fortunately, Cobb decided to stay and was able to find a reasonable Florida home mortgage deal thanks to a new initiative in Delray Beach aimed at replacing blighted homes with affordable housing.

Later this month, she’s set to become the first homeowner to move into a city-subsidized home obtained through the Delray Beach Community Land Trust. Established in December, it’s one of only a few such trusts in Florida.

“I’m so excited. I’m going to retire here,” said Cobb, 30, who works as an executive assistant and board liaison in Delray Beach’s City Clerk’s Office and has rented in the Boynton Beach housing market for the past year.

The expensive South Florida housing market

Cobb’s situation is similar to many other public employees, including teachers and police officers, whose salaries are no match for the South Florida real estate market.

Since 2002, median home prices in Florida have rocketed 77 percent, but the median income has risen only 1.4 percent, according to a study released in July by the Florida Housing Coalition in Tallahassee. It’s a financial lethal combination for those seeking Florida home loans.

The backlash has become this:

About 90 percent of the workforce in Palm Beach County can’t afford to buy a median-priced home, according to a July report released by the Housing Leadership Council of Palm Beach County, a new group formed by the Palm Beach County Economic Council. Those that can barely do so have been forced to use resources that often lead to defaults, such as subprime Florida mortgages.

The median-priced single-family home in Delray Beach costs $479,000, based on sales from January to March. The city’s median household income in 2005 was $50,842, according to figures compiled by Florida International University. The math is easy. Affordable a house there is not.

But Delray Beach officials are determined not to let home prices run out professionals who provide essential services to the city, said Joe Gray, assistant director of the city’s Community Redevelopment Agency. A dedication to a healthy Florida home loan industry in the area has been focused on.

Under the trust, residents who earn up to 150 percent of Palm Beach County’s household median income qualify to buy the home, but NOT the land. In turn, they get a renewable, 99-year ground lease. Residents are required to put down 5 percent of household income as a down payment, Gray said.

“The land trust is a tool we’re using to ensure there isn’t a lot of displacement as the city continues to grow,” he said. “The community will always control the land and be able to ensure that property is affordable and that the land is used for the interest of the community.”

Boynton Beach is also exploring the possibility of establishing a land trust and perhaps partnering with Delray Beach, said Lisa Bright, executive director of the Boynton Beach Community Redevelopment Agency. This would all make the timing even better for potential South Florida buyers.

Cobb is moving into the first of three new houses recently purchased along 13th Avenue by the trust. The home features four bedrooms, two baths, granite countertops, a garage, fresh landscaping and a fenced-in backyard.

The trust is covering the estimated $100,000 for the land. The price tag for Cobb: $205,000, minus an additional subsidy. Homeowners receive subsidies based on income of up to $75,000, Gray said.

The catch: Owners must offer the same deal when they decide to sell and agree to a resale price that is tied to the compounded annual increase in median income. But that doesn’t change the fact that this is a helpful, affordable way for lower-income, first-time home buyers to purchase a beautiful house.