First-time homebuyers, who have been struggling to get into the market, have something to cheer about in Gov. Ned Lamont’s budget. It’s a program called Time To Own.
Started last June the program will cover up to 20% of the down payment and up to 5% closing costs. The program can also be used in conjunction with other down payment assistance program being offered by mortgage lenders and potential homeowners don’t have to tell sellers they are using the program, so their bid isn’t eliminated when they put an offer down on a home.
The minimum loan amount is $3,000 and the average has been about $30,550 on a home valued at around $249,000. The loan amount is based on the area median income, so buyers looking in New Haven and New London will receive more than those looking in counties like Fairifeld.
Sounds great, right?
Bob Wiedenmann of Sunwood Development Corp. in Wallingford is skeptical.
Wiedenmann said that the Multiple Listing Service says there are only about 860 homes for sale at the moment under $300,000 in Connecticut. Just last month there were only a total of 3,600 total homes for sale across the state.
Wiedenmann said a first-time home buyer would need to be making $96,000 a year to only be spending about 30% of their income on a $300,000 mortgage. That 30% is what is considered affordable.
“It’s a simple supply and demand issue,” Wiedenmann said.
There aren’t enough homes for sale in Connecticut and builders want to be building more, but it’s currently not affordable to do that.
Lamont has proposed spending about $50 million a year on the Time To Own program. This level of funding is expected to assist in the purchase of about 1,250 homes annually.
Lamont is also proposing another $100 million a year to expand workforce housing, $50 million for the Housing Trust Fund, and $100 million for flexible housing.
In total, Lamont wants to spend $600 million over two years in an effort to build 6,400 units of housing across the state.
While builders like Wiedenmann are excited for the funding, they are doubtful it will get Connecticut the inventory it needs in order to house everyone who needs a house.
Wiedenmann said unless a farmer is giving him the land, it’s almost cost prohibitive to build a single-family unit in Connecticut with all the local regulations and requirements that need to be met to break ground.
And that doesn’t take into consideration the lack of qualified labor and the cost of materials, which are still high as a result of the pandemic.
“We cannot let our state fall into a housing crisis,” Lamont said. “Our administration is proposing significantly increased investments in affordable and workforce housing because this is a critical component needed to grow good-paying jobs, ensure businesses have the workforce necessary to fill in-demand positions, incentivize young people to stay in Connecticut, and support our economy.”
Connecticut was able to build about 5,000 new units last year, but Lamont’s Budget Director Jeffrey Beckham has said the 6,400 units would be in addition to that number.
“It’s ambitious but doable,” Jim Perras, CEO at the Home Builders & Remodelers Association of Connecticut, Inc. said. However, “a couple of things need to happen.”
He said the governor urged municipalities to reform their zoning regulations and speed up the approval process, “which sounds nice, but we know municipalities heretofore have historically been reluctant to do that on their own without an incentive or repercussions.”
“I will also urge mayors and first selectmen to develop and act on a plan of their own where they will allow more housing in their community through friendlier zoning and expedited approvals,” Lamont said during his budget address. “Towns may submit their plans to facilitate housing on their terms. Doing nothing is not an acceptable strategy.”
Perras said the home builders still have an issue finding plumbers and HVAC folks. He said there needs to be incentives to small businesses to hire new apprentices and speed up the transition to journeyman.