City may put homeownership developments on pause
The city of Boston could take a breather on new affordable home ownership development starts, said Department of Neighborhood Development (DND) spokesperson Lucy Warsh.
"We are taking a close look at our planned projects and those in the pipeline," said Warsh. "We want to make sure we make the right choices."
If DND does decide to slow down on home ownership projects, several affordable housing developers could see projects they've been working on for years stalled or totally re-engineered. DND distributes funding and subsidies for developments throughout the city each year.
"The rapidly changing market is a real challenge to affordable housing," said Joe Kriesberg of the Massachusetts Association of Community Development Corporations. "I'm not surprised if they're taking a look at it. But our view on such policy changes is that they should be widely known and transparent. If the city's policy changes quickly and abruptly there are serious consequences for those that are developing projects."
Many mortgage companies have tightened up their borrowing rules in the continuing aftermath of a major foreclosure crisis caused by adjustable interest rate mortgages and sinking home prices. Mortgage payers have found themselves with less incentive to pay high mortgages on properties that are dropping in value. And buyers in the market today also find themselves with a new set of choices.
"[Buyers] may be looking at a property in the same neighborhood as one of DND's for $25,000 more but [without] a 50-year covenant or other restrictions," said Warsh.
Affordable housing bought from DND often carries restrictions on the amount of equity that can be earned in order to limit real estate speculation.