Lower sales prices to take effect in Spring 2023
Mayor Michael Victorino has signed Bill 107 into law, enabling a change to the formula used to price affordable homes. Councilmember Gabe Johnson introduced the bill after years of hearing community concerns that even “affordable homes” were too expensive for Maui County’s working families to become homeowners.
“Bill 107 will put homeownership within reach for more Maui County residents,” said Mayor Victorino. “We will continue to work with developers to make these home prices possible. We have examples of successful public-private partnerships that bring construction costs down through subsidies, infrastructure support, creative financing, various exemptions and bonus packages. Bill 107 should encourage developers to meet with the County while still in planning stages to negotiate similar partnerships. We are serious about delivering truly affordable housing to our community. By investing in our people, Maui County is making it possible for our ‘ohana to afford homes again.”
“Maui County has been using a formula to estimate how much buyers in each income bracket can afford to pay for a home, but the formula didn’t account for costs like homeowner’s association fees, mortgage insurance, and other expenses that mortgage lenders require,” said Councilmember Johnson. “Bill 107 requires sales prices to be calculated similar to how lenders do, making it easier for homebuyers to qualify for mortgages. It will help to shield our residents from Maui’s volatile investment market.”
During committee hearings on Bill 107, lending experts explained that lower sales price guidelines will make it easier for homebuyers to access FHA and USDA loan packages that allow for a down payment of 0 to 3% instead of the 10 or 20% required by other mortgage products. Linda Munsell, Deputy Director of the Department of Housing and Human Concerns, estimated the new sales price calculations will reduce the cost of affordable homes by an average of 22%.
2022 sales price guidelines estimate that a family making $60,000 annually could pay $289,100 for a 3-bedroom home. The new sales price guidelines would bring the price of a 3-bedroom home closer to $157,000 for the same family. Similar reductions would occur at all qualifying income levels. New sales price guidelines will take effect when HUD announces the 2023 Area Median Income numbers in Spring of 2023.
Google Drive link: https://drive.google.com/file/d/1eCwHAhGUvwy80lVxRzM4AtiGhyK-imZX/view?usp=sharing
County of Maui / Shane Tegarden video
Original source can be found here.
