Schenectady homeownership program continues to help as costs soar – The Daily Gazette

SCHENECTADY — With a longstanding seller’s market pushing up the posted price on homes and high inflation driving up the cost of almost everything else, people hoping to buy their first home have been squeezed for more than a year.

Rising mortgage rates make the prospect even more expensive in 2022.

Thirty-year mortgage rates approached 5% on Friday, a level seen only once and briefly since the Great Recession 11 years ago.

Even 5% is still quite low, historically. But for younger audiences, it’s higher than ever.

“The hardest hit group of buyers will be first-time homeowners, which is a shame,” said Laura Burns, CEO of the Greater Capital Association of Realtors.

“In 2021, we know house prices rose 19% across the country, which was faster than any time in recent history,” she said, adding that banks could disqualify more loan applicants because the combination of a high purchase price and a higher interest rate results in a monthly payment that is too high for their income.

“It’s going to be interesting to see what happens because … that’s when you get a reality check for sales people,” Burns said.

The Federal Reserve is expected to raise interest rates several times this year.

“I think the biggest impact on the consumer will be residential mortgage rates,” said Tom Amell, CEO of Colonie-based Pioneer Bank.

All other things being equal, a $200,000 loan costs $955 per month for 30 years at 4% interest and $1,074 per month at 5%. That’s still less than a month’s rent for many apartments, but landlords bear the property tax, insurance and maintenance costs that tenants don’t pay.

Over the 30-year term, that extra $119 per month equals an extra $42,840 in payments, less any tax benefit from deductions for extra mortgage interest paid.

Ideally, Amell said, high 10-year interest rates will begin to rein in inflation that has hit 40-year highs, bringing some benefits to consumers.

Another potentially favorable variable for potential buyers, he said, is that a tight labor market is driving up some wages and many people have been saving their money throughout the COVID pandemic.

“There’s more liquidity in the market – consumers have more cash on hand,” Amell said.

Single-family homes sold through the Greater Capital Association of Realtors’ multiple listings service had a median sale price of $255,000 in 2021, up 19% from 2019 and 28% from 2017.

The town of Schenectady has long had some of the lowest housing prices in the region, but prices in the town have risen at an even greater rate than the region as a whole. The median sale price in Schenectady was $186,000 in 2021, up 49% from 2019 and 84% from 2017.

City program

HOMES – Home Ownership Made Easy in Schenectady – has two purposes: to stimulate home ownership in the city (the Census Bureau reports that the rate of owner-occupied homes is only 45%, compared to 64% for the entire county) and recycle the tax. vacant but salvageable houses.

Maurice Brown III, the city’s program coordinator, said raising interest rates will not work to the benefit of HOMES or its participants.

“It will certainly have a significant impact on low-to-moderate income families,” he said.

Brown draws on his experience as a loan officer at financial institutions to boil down the numbers into concepts of value for the families he works with.

For the large group of people classified as “financially disadvantaged,” Brown said, upfront purchase costs are often a bigger barrier than monthly costs.

HOMES connects homebuyers with financial education to help them manage monthly costs and with grants that help with upfront purchase costs.

The list of potential sources of financial aid is long and not limited to low-income applicants: there are also grants for the preservation of historic properties; for black shoppers; and for teachers and emergency responders in some neighborhoods.

“Depending on how you bundle these grants, they could be stackable,” Brown said.

There is, as you might expect, a lot of fine print and paperwork. Brown’s job is to guide people through it all.

2020 was a slow year due to COVID, but in 2021 the HOMES program sold 102 properties for a combined gross of $3.7 million, Brown said. In the first three months of this year, the group sold 19 properties for $507,600.

As of April 1, another 74 sales were in progress and 25 structures were available for purchase, along with 270 plots of land, including about 55 large enough to build on.


One of the most recent sales through HOMES was with the Seecharran family.

Satnarine and Natasha Seecharran started the buying process two years ago, were delayed by the pandemic, started the renovation process a year ago, then had to find a new contractor when the first didn’t finished the job.

The project was a success: the century-old house on Delamont Avenue now shines inside with bright colors and abundant lights, and the cut-out walls create a feeling of openness.

There is more to do, says Daniel, one of the Seecharrans’ three sons. But it’s now their home: they moved on April 1st.

The family lived opposite the vacant house after immigrating from their native Guyana, and they knew it well enough to be interested when the town put it up for sale.

There is a perception, Daniel said, that properties the city seizes for tax reasons are falling apart. This is not always the case: this one required a lot of work but was solid.

The family knew they would want a new kitchen and bathrooms, and a custom living space in the home they would buy, he said. So why buy a $150,000 house just to rip out perfectly functioning accessories?

“That was the shocking part of it all – buying an entire house for $10,000,” Daniel said.

Professional renovations are a condition of sale, and hiring contractors has significantly increased the total purchase price for the family.

Brown and other city employees helped the Seecharrans through the process, Daniel said.

“It was very easy to work with the city on this project,” he said. “From my point of view, one of the most important things was information – I had to do a lot of research as a private person.”

Brown provided a lot of help.

“Another thing that made us buy this particular property is that it’s the heart of Schenectady,” Daniel said. “There is a large Guyanese population here.

The timing was a bonus, he added: They beat the interest rate hikes.

Investors Welcome

The city’s preference is to sell foreclosed properties to buyers who will live on site, Brown said. But it also sells to investors. Investors have had a mixed record in the city, with some for-profit trading properties at the expense of surrounding neighborhoods. But others have done a good job, Brown said, and the city will consider selling several properties to investors with strong track records.

JAW Housing was one such investor, Brown said.

Director Jermaine A. White said the process worked well for him.

He bought a two-family home on Davis Terrace for $3,000, spent $120,000 on renovations and was expected to close a $190,000 sale of the building on Friday.

A project on Chestnut Street was equally lucrative.

White has submitted offers on four other city-owned homes.

“It’s been great with the city. Working with the construction department has been great,” he said.

The Rensselaer resident typically buys homes with the intention of keeping them as rental properties – he owns 36 units – but the profit margin from a sale on Schenectady properties was too good to pass up.

“The market is so much more aggressive in Schenectady,” he said.

The economics at play – rising house prices, rising interest rates, inflation – makes him wonder how long the housing market can continue at this level.

“As the market continues to rise, first-time home buyers will simply not be eligible. The person can’t afford it anymore,” White said. “I would say probably next year or the year after, if prices keep going up.”

White depends on financing from investors and construction loans, so mortgage rates don’t directly affect him.

The cost factor that might eventually catch up to him is the price he pays for building materials.

“Before, I could buy a 2×4 for $4. Now it costs $10,” White said. “I think that’s where most prices go up.”

Carlos Garcia bought a house on 10th Avenue a year ago. It was not a city-owned home, but the city helped by arranging a grant to help cover closing costs and inviting him to a homeownership class.

“With prices going up with rent, it was about time I moved into a real house,” he said. “It was a challenge. It’s my first house. I went through the home ownership program with the city. Once I completed the process, everything else fell into place.

Garcia built his credit score before he started the process and stuck to an interest rate that was good then and really good now. Still, he kept his budget in mind and was determined not to pay more than the asking price, something many homebuyers have to do in a highly competitive market.

“A couple of the guys I work with are paying $1,800, $1,900 a month,” he said. “I knew I wasn’t rushing.”

The payments are low enough that Garcia can make several additional payments each year.

“A lot of people don’t realize that ‘additional payments reduce the total cost,’ he said. He expects to pay off his 30-year mortgage in 17 years at this rate.

“I’m trying to set them up for something I never had,” the Bronx native said of his two daughters. “It’s life enhancing.”

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