The massive new Westlake development in western Palm Beach County will entice middle-class home buyers with down-payment grants of 3 percent of the purchase price, builder Minto Communities said this week.
The funding source for the program already is raising some eyebrows: Minto Communities said it will impose a $1,500 fee on every sale and resale in Westlake, where 4,500 homes are planned to be built over the next two decades.
Minto Communities USA President Mike Belmont called the down-payment program both creative and necessary — state and county programs for affordable housing simply haven’t proven sufficient, he said.
“Workforce housing is a community-wide issue, and funding for these programs should be drawn from a wide cross-section of the entire community,” Belmont said.
Dominic Calabro, head of Florida TaxWatch, called the $1,500 fee “unusual” and said he’s not a fan of the concept.
“No matter how well-intended, it looks like, walks like and talks like a tax,” Calabro said. “There’s no limit to how much good you can do with other people’s money.”
Minto Communities Vice President John Carter acknowledged that a developer collecting a surcharge for affordable housing is “the antithesis” of business as usual for Florida builders. For decades, home builders have chafed at impact fees and other government-imposed costs that increase the prices paid by buyers of new homes.
Minto Communities said it will soften the blow by covering the $1,500 fee for each of the first 211 homes being built in its Hammocks neighborhood, where homes already are under construction and sales are set to officially begin in late October.
After that, builders will pay the $1,500 fee to the nonprofit City of Westlake Community Foundation on each new home, Minto Communities said. When homes are resold, the buyer or seller will pay the fee.
The down-payment assistance will be given as a no-interest loan with a 10-year term, and the sum is gradually forgiven at a pace of 10 percent a year. So, if a buyer were to sell a Westlake home after five years, he’d have to repay half of the down-payment loan.
To receive the down-payment assistance, buyers must apply to the Palm Beach County Department of Housing and Economic Stability. The grants will be available to buyers with household incomes of as much as $95,000.
While the $1,500 fee might irritate some buyers, David Cobb, regional director of Metrostudy, a housing research firm, called the approach “forward-thinking.”
“It’s particularly useful in a market like ours, where housing is so expensive,” Cobb said.
As it begins marketing homes at Palm Beach County’s first large-scale housing development since the real estate crash, Minto Communities is stressing entry-level prices that fit the budgets of teachers, nurses and other middle-income workers.
“There’s a perception that it’s going to be $600,000 to $1 million,” Belmont said. “It’s not.”
Prices in the Hammocks neighborhood start at $276,000 for a home that’s just under 1,500 square feet. Prices go as high as $496,000 for a model that spans 4,300 square feet. Swimming pools, screen enclosures and other upgrades cost extra.
At those prices, Westlake’s down-payment grants would range from a bit more than $8,000 to just under $15,000. Buyers also could apply for other down-payment programs, Minto Communities officials said.
For instance, the Florida Homebuyer Loan Program offers down-payment assistance of up to $7,500 for buyers in Palm Beach County. Under that program, the income limit for a family of four is $83,426.
One advocate for affordable housing said down-payment assistance, no matter how generous, doesn’t go far enough.
“A new community is being created, and it needs to ensure that affordable housing is available,” said Jaimie Ross, president of the Florida Housing Coalition in Tallahassee. “This strategy is not going to you there.”
She suggested setting aside land for homes where value increases would be limited.
Florida collects a documentary stamp tax of 0.7 percent on property sales and 0.35 percent mortgages, a fee that’s used partly to support down-payment programs.
Westlake is a newly incorporated city on the site of the former Callery Judge citrus grove. Its first new neighborhood is being built just east of Seminole Pratt Whitney Road.
Minto Communities has yet to announce prices beyond those for the 211-home Hammocks neighborhood. The project’s total count of 4,500 homes includes 800 townhouses.
Once a staple of Palm Beach County’s property market, newly built entry-level houses essentially disappeared after the housing crash of 2008 and 2009.
With large tracts of land scarce, builders have turned their focus to more expensive new homes. The median price of a new house sold in Palm Beach County is more than $600,000, and Westlake’s starting point of $276,000 is likely to lure buyers, Cobb said.
“That’s a remarkably low price for a new home in Palm Beach County,” Cobb said.
Palm Beach County ranks toward the back of the pack nationally in housing affordability, according to the National Association of Home Builders. Just 56.9 percent of homes sold in the second quarter of 2017 were affordable to a family making the median household income of $67,900, the group says. That ranked 172nd among 233 U.S. metro areas.