The home at 5456 Black Street is being sold to a household making less than 80% of the median household income for the Pittsburgh region. The home at 5456 Black Street will remain affordable for 99 years via a deed restriction, which states that when the home is sold in the future, it must be sold to another household also earning less than 80% of median household income to ensure that the home provides long-term, affordable housing in the neighborhood.
What is meant by 80% of median income?
Area Median Income is determined by the federal government. All income from wage earners in the household, or from family members receiving income from sources other than work, must be counted. For the Pittsburgh region in 2020, these are those numbers:
What is the sales price for the affordable home?
The sales price is $183,794. For a buyer within the income range shown above, the Urban Redevelopment Authority also offers a second mortgage loan that allows the buyer to borrow far less from the bank. This reduces the buyer’s monthly mortgage to a level that can fit within their budget, including up to a $50,000 second deferred mortgage loan from URA Neighborhood Housing Program. The Urban Redevelopment Authority (U.R.A.) also makes available to first-time buyers up to $7,500 in assistance from Housing Opportunity Fund towards their downpayment and closing costs.
What are the features of the U.R.A.’s second-mortgage loan?
The loan comes with a 0% interest rate and is repayable only when the buyer sells the home down the road, or seeks to assign the deed to the house to another party. Until that time, the buyer must continue to occupy the home as their primary place of residence. More information on the U.R.A.’s program can be found here.
How much will a buyer be spending on their utility bills?
The utility bills for the home will be lower than a traditional, new-construction house because of the insulation used in the walls and roof, the selection of energy-efficient heating and cooling equipment, and the installation of plumbing fixtures that are designed to use less water. All appliances in the home are Energy Star Certified, and the plumbing fixtures are WaterSense certified.
What would the mortgage payment be for a lower-income homebuyer?
Assuming a minimum 5% downpayment, the buyer’s monthly mortgage payment on the home would be in the neighborhood of $950/month, provided they’ve qualified for the full second-mortgage loan from the U.R.A. The exact monthly payment will not be known until Allegheny County completes its assessment of the house for tax purposes. The monthly payment could be higher by $40-$45 per month if the bank requires that the buyer carry private mortgage insurance. Private mortgage insurance or a premium is often required when a buyer’s downpayment is 20% or less. A bank would be able to qualify a family earning $40,000/year for a mortgage loan sufficient for them to allow them to close on the purchase of 5456 Black Street.
How much did the home cost to build?
The two-bedroom home at 5456 Black Street cost approximately $325,000 to build. This includes the land cost, construction costs, all fees and costs associated with the construction financing, and all costs associated with architectural, structural, and civil engineering services. One factor that affected the construction cost was that the three vacant parcels each had existing foundations buried under the ground. The foundations were filled with construction debris from the previous homes when they were torn down years ago, making the soil unbuildable. To prepare the site for new homes, we needed to excavate the foundations, remove the debris from the site, and fill the subsequent hole in the ground with a new basement and foundation. In addition to ground buildability, the project has encountered water issue caused by two terracotta pipes buried underneath the site, the water damaged the site preparation work and required us to do additional value engineering and site infrastructure work to prevent future damage. Lastly, the utility infrastructure connection challenges increased the costs as well. The water and sewer line were across the street, which increased the whole digging and requirement work.
Where did Module find the money to subsidize the cost of building the home?
Module assembled grants and the in-kind contributions of materials to reduce the total development cost of the home, and lined up a commitment from the U.R.A. to provide secondary mortgage financing for a qualified buyer. Module collaborated with the Bloomfield Garfield Corporation as a partner in securing the grant funding for the project. The following were received either from the U.R.A. or from other parties to help reduce development costs:
A $70,000 Housing Opportunity Fund Grant
A $35,000 Pittsburgh Housing Construction Fund Grant
In-kind contributions of materials from Lowes, Mitsubishi, James Hardie, and other building product companies.
In addition to these, Module did not take a developer’s fee from the sale of this house, and contributed around 30k in-kind work and capital contribution into this unit.
What was the Bloomfield Garfield Corporation’s role in the project?
BGC helped facilitate community input and feedback into the project, and its Board of Directors approved their staff seeking grants from the U.R.A. needed for the construction of the affordable home only. The BGC assisted us in qualifying buyers for the affordable home and helped steward the project. The organization was not a co-developer or an investor in the project, and was not paid by Module for the help they provided.