The District Can Learn from Others about the Effects of Long-Term Resale Restrictions

Long-term resale restrictions are relatively new to DC.  It takes a few years to understand their effects.  Fortunately, we have some examples from the last several years that demonstrate what Manna has been saying, simply that long-term resale restrictions are not fair and have not been working.

  • In Boston, MA, resale-restricted properties are not selling due to the softening housing market, undercutting housing programs’ intent.  Buyers can buy non-restricted properties now becoming affordable.  Therefore, the city and nonprofits have spent significant funds marketing units.  A proposed bill will reduce the restrictions to 10 years. For more information, see “Droop in Home Sales Infect Even the Subsidized Market” by Binyamin Appelbaum, Boston Globe, 28 January 2008,
  • In Chapel Hill, NC, the government has had to appropriate an unexpected and additional $3.1 M because owners cannot maintain their homes and administration costs are high to oversee each and every resale.  There is little financial incentive to pay for, say, a new roof if a buyer cannot realize the market benefit of the maintenance.  Therefore, new public funds are necessary to spur home repairs, improvements. For more information, see “Housing Program Strapped: Agency Needs $3M to Keep Homes Affordable” by Lisa Hoppenjans, The Chapel Hill News, 1 April 2007.
  • In Madison, WI, housing advocates, stakeholders, city officials and developers amended their city’s permanent affordability restriction on Inclusionary Zoning (IZ) homes to simply be a recapture model because the complex resale formula was not attractive to buyers.  Now, for example, if the City’s “subsidy” is 1/3 of the market price at the time of purchase, then the City gets back 1/3 of proceeds when the home is resold.  Buyers understand this and their IZ program has become successful. For more information, see “Madison, Wisconsin Inclusionary Zoning Ordinance” by Manna, Inc., Fall 2006,
  • In Austin, TX, city officials increased the restriction period from 15 to 30 years, but affected buyers and owners have accused them of predatory practices; including not fully disclosing the effect of the restrictions, deceiving buyers into signing onto complex formulas at the closing table, and forcing those with no other option to participate. For more information, see “City, homeowners at odds over changes to loan program loan” by Suzannah Gonzales, The Austin American-Statesman, 12 October 2007.
  • In South Carolina, long-term resale restrictions are disastrous for buyers and set up de facto redlining.  A town manager says that the town’s 30 year resale restrictions have “potentially trapped residents in financial disaster” while a local developer said, “The deed restrictions make the properties unattractive to mortgage lenders.” For more information, see “Island May Abandon Efforts to Create Affordable Housing” by Tim Donnelly, the Island Packet, SC, 29 June 2007,
  • In Palo Alto, CA, city officials have retreated from permanent affordability restrictions because the restricted owners could not keep up homes or sell and move into the open market.  The nonprofit running the program says, “Sometimes residents are eligible but can only barely afford the house and may not have enough savings for maintenance or fixing the heater, so over time the unit is not in the best shape.” For more information, see “Affordable Housing on City’s Slate” by Kristina Peterson, Palo Alto Daily News, 10 October 2007,

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