As you know, I own a one bedroom condo thanks to a below market rate inclusionary program offered by the Mayor's Office of Housing. Among the many rules and regulations surrounding the program, one states that the city sets the sale price and ultimately qualifies a potential purchaser.Out of curiosity, I went hunting around the Mayor's Office of Housing web site and found a few potential calculations for pricing the condo. Unfortunately, the condo can go down in price--below selling price. In that case, I can make a request that it be sold at the purchase price instead (which would mean I'd still lose money, just not as much).
There are 3 potential ways to price a unit, but it seems like since I purchased before 6/26/2007 there are only two available to my unit:
Method 1: Consumer Price Index Series ID : cuura422sah at http://data.bls.gov/cgi-bin/srgate
Original Price $278,000
DOP 6/1/2005 CPI 223.0 (June)
DOS 3/1/2007 CPI 238.429 (Dec 2007)
CPI % Difference 6.919% (CPI Sale - CPI Purchase)/CPI Purchase
Resale Price $297,234 ($19,245)
5% for Agent $14,862 The city allows a % to pay Realtor fees
Resale Price $312,096
The other method is a bit confusing so I won't show you the mess I made of it.
The city gave me $50,000 through a down payment assistance program (DALP) which I repay only when I sell. The catch is I have to give them a percent of the profit equal to the percentage size of the DALP loan. In this case, with the house costing $278,000, the DALP is 18% of the total price. The breakdown of sale price minus original price is as follows:
Gross appreciation $312,096 - $278,000
Profit $34,096
DALP repayment $6137
5% for agent $14,862
Profit $13,097
My mortgage payment is $1073 and my home owners is $622 and my house tax is $300. After living in this space for 2 years and eight months, that works out to $409/month coming back to me as a profit, in addition to the $250/month in principal ($8K so far) and whatever amounts I got from the tax breaks which must be $100-200 a month. So I spend $2,000 a month and get back $800.
It's like spending $1,200 in rent for my place. That's not a bad deal as a quick whirl in craigslist shows the majority of 1 BRs are in the $2K range with ones around $1200-1400 as really tiny, run-down, and in the outer edges of the city.
Assuming the CPI or whatever measure they use continues to climb, the condo remains a good deal. Friends seem to think that with inflation going up the CPI for housing will too, even as housing prices drop. I sure hope so.
