The City of Austin has not yet sold one of the two dozen homes it began marketing six months ago to low-income families affected by displacement and the influx of wealth into neighborhoods.
This is the city’s first attempt at using its long-touted “preference policy,” approved by council members in 2018. Policies like these — also referred to as "right-to-return” policies — have been adopted in other cities, including Portland, Ore.
Applicants need to prove they earn less than the typical household in Austin; that’s no more than $70,600 a year for a two-person household, according to numbers set by the federal government.
Although the city is selling these 24 homes at a fraction of what they’d sell for on the traditional housing market, a program manager with the city’s Housing and Planning Department told KUT applicants have struggled to qualify for mortgages.
“Typically it's lack of credit, poor credit or lack of assets or their debt-to-income ratio,” Chanda Gaither said.
Mortgage interest rates have also nearly doubled over the past year, making it harder for people to afford to buy homes. That has added another hurdle, Gaither said, but it's not the core of the problem.
"When rates go up, it's going to make it harder. But lack of assets and sometimes lack of credit — maybe they don't have bad credit, but lack of credit — those factors are always there," she said.
Gaither said the city is now asking people who otherwise qualify for the program to take homeownership courses in the hopes they can qualify for mortgages soon. She said she hopes to have someone under contract for the first home next month.
That home — a three-bedroom on Linden Street in East Austin — will go for $221,000, a far cry from the city’s median sales price of $555,000. The city is able to sell these homes for much less because it is operating them as community land trusts, a model where the buyer owns the house but not the land it sits on.
Those applying will get priority if they can prove they have either lived or used to live in a gentrifying neighborhood or have been displaced by a natural disaster or government action, such as eminent domain.
“What we're trying to do is make available for people who are vital parts of our citizenship — ... they work in town, [their] kids go to school in town — an opportunity to own if they would like to,” Gaither said.
Once the city sells this first home, it’ll begin making available the 23 remaining houses. While Gaither hoped to open applications for all the homes by next summer, she said that doesn’t seem likely.
