WILMINGTON — Affordable housing. It’s a term heard frequently in Wilmington but not because of its abundance, instead housing prices continue to soar as new residents flock to the area. Which is why the City of Wilmington is looking to readdress some of its housing programs that provide assistance to both renters and potential homeowners.
From January to June of 2018 the average sale price of a home was $337,894 in New Hanover County, far exceeding the city’s Home Ownership Program (HOP) maximum loan amount of $185,000.
The program helps would-be homeowners acquire loans with an interest rate below the market rate, but even if residents are approved for the loan, finding a home within city limits for that price range is difficult.
“The HOP Program helps low and moderate income households purchase homes with the City of Wilmington by providing loans with blended interest rates lower than the market rate … For that same period the average sales price for a condo/townhome was $243,847. In FY 2018, 120 persons attended HOP Homebuyer Education and 24 were prequalified for a HOP loan at year end. Unfortunately, these eager homebuyers have not been able to find a home that is affordable within the City limits. Of the eligible HOP borrowers, only seven closed on a home loan,” according to city documents.
On Tuesday City Council will vote to approve a resolution that would up the ante for the HOP program, allowing more Wilmington residents to potentially own homes. Funding for HOP is provided both by federal housing money as well as money from the city’s general fund.
Rental Rehabilitation Incentive Loan Program
The HOP is a program for potential homeowners while the Rental Rehabilitation incentive Loan Program (RRIL) looks to offer assistance to potential developers. Workers’ wages in Wilmington are not keeping up with the rising housing costs with the average hourly wage for workers in Wilmington at $12.77 per hour.
“In the Wilmington metropolitan area, renters are challenged to find housing that is affordable. Research conducted for the National Low Income Housing Coalition estimates the 2018 average wage for renters in Wilmington is $12.77 per hour, enough to comfortably afford a rent of $664 for a two-bedroom unit. In Wilmington, the median rent is $993 for a two-bedroom unit. Simply put, there is a need for rental housing that is more affordable to working households in Wilmington, especially for households with lower incomes, including persons with disabilities and special needs,” according to City Manager Sterling Cheatham.
New housing stock is constantly being constructed in Wilmington often leaving older housing options in deteriorating conditions. With the RRIL, developers are incentivized to purchase these dated properties and bring them back to livable standards, providing new affordable housing options for renters.
The City of Wilmington offers the RRIL to assist with financing for the creation of affordable rental housing in existing residential homes in need of rehabilitation, or for re-construction on vacant in-fill lots. The loan is targeted to small developers, investors, non-profits, or others interested in providing single-family and small-scale multifamily rental units. The intent of the program is to bring badly deteriorated or dilapidated housing units back into the rental housing stock; therefore, all potential units must be vacant.
If approved, the changes would include:
- Increase the maximum loan amount from $100,000 to $125,000
- Increase the penalty for non-compliance with terms and conditions from recapture at 5% per annum to 10%
- Increase the Loan to Value from 80% to 90% after rehabilitation value
- Allow project developers to serve as project managers, in accordance with state regulations, when project costs do not require a General Contractor
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