AUSTIN, Texas — A City of Austin program to help those impacted by gentrification is off to a slow start, according to a report from KUT.
Back in April, the City announced it planned to start a pilot program called the Austin Community Land Trust Program that would allow those affected by gentrification to get first dibs on 28 homes that are for sale.
KUT reports that the program, which now includes 24 homes rather than 28, is the City's first attempt at using its "preference policy," approved by the city council in 2018.
To qualify, applicants need to prove they earn less than the typical household in Austin. Applicants will get priority if they can prove they have either lived or used to live in a gentrifying neighborhood or they have been displaced by a government action or natural disaster.
But despite the fact that the City is selling the two dozen homes at a fraction of what they would typically sell for, KUT reports that the City has yet to sell a single one. The reason? Applicants are struggling to qualify for mortgages.
Chanda Gaither, a program manager with the City's Housing and Planning Department, told KUT that the difficulty is usually because of lack of credit, poor credit or lack of assets or the applicants' debt-to-income ratio. Mortgage rates have also nearly doubled in the past year, which Gaither said is an additional hurdle but not the core issue.
"When rates go up, it's going to make it harder. But lack of assets and sometimes lack of credit — maybe they don't have bad credit, but lack of credit — those factors are always there," she told KUT.
Gaither told KUT that the City is now asking people who would otherwise qualify for the program to take homeownership courses in hopes that they can qualify for mortgages soon. She said she hopes that next month, she will have someone under contract for the first home – a 3-bedroom in East Austin that will go for $221,000 to $334,000 less than Austin's median sales price.
KUT noted that the City is able to sell these homes for much less than market cost because it is operating them as community land trusts, "a model where the buyer owns the house but not the land it sits on."
To learn more, read KUT's full report.
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