O.C.'s ‘Affordable’ Homes Are Anything but, Critics Say
In Orange County’s pricey housing market, even some winners of a recent affordable-housing lottery were too cash-poor to take advantage of their luck and buy a house -- a situation one advocate called “ludicrous.”
Of 700 applicants, 143 winners in the development’s first phase were called in late September to make sure they financially qualify to buy low-cost homes being built on the former Marine Corps Air Station site in Tustin.
At least a handful of winners found they didn’t have enough money to make required down payments on the properties, which were priced from $55,100 to $311,400, a fraction of the market prices.
Those units were advertised by Lennar Corp. and William Lyon Homes with the words “3% down payment required.” But some buyers found that the down payments were nearly 50% of the purchase price.
The large down payments were required to meet redevelopment requirements. State redevelopment law requires that occupants not use more than 35% of their incomes on monthly housing payments, which include the mortgage, taxes, insurance and association fees.
Several prospective buyers have called Tustin City Hall to complain, said Assistant City Manager Christine A. Shingleton. Affordable-housing advocates who learned about the problem said they were outraged.
The requirement for large down payments from low-income families “is ludicrous,” said Crystal Sims, director of litigation at the Legal Aid Society of Orange County. “It makes a joke out of an affordable-housing project.”
Lennar and William Lyon Homes are building 1,540 units in a redevelopment project at a closed Marine base. The complex includes 308 low-cost units, meeting a state redevelopment requirement that 15% of the housing be low-cost.
Eligibility depends on the number of people in a household and family income. For example, a family of four with an annual income of less than $62,640 is classified by the state as eligible for low-cost housing in Orange County.
The companies are meeting their obligation to build the housing and comply with laws guiding redevelopment projects, according to city officials.
With the median price of an Orange County home about $626,000, developers have enough qualified buyers of the low-cost units, even those requiring large down payments, so the developers won’t provide any sort of financial assistance for those who don’t have the down payment.
“On one hand, it’s disappointing that the program is not for everyone,” said Richard Knowland, Lennar vice president. “On the other hand, it’s exciting that it is affordable for many.”
William Lyon Homes representatives did not return repeated calls for comment.
Knowland said any lottery participant could have talked with the developers before the drawing to see if they could afford the homes.
But one buyer, who asked not to be identified because she was still trying to find money for the large down payment, said she waited more than two years to try to buy one of the homes. The lottery advertising from both companies, she said, misled her into believing she needed only 3% down. After she won the lottery, she learned she’d need a $48,000 down payment for a $113,000 two-bedroom home she wanted, documents show.
“It was so disappointing,” said the single mother, who earns $43,000 annually. “For a week before the lottery, I couldn’t sleep, wondering if I was going to be picked. Then I was picked, and I couldn’t believe that I was being asked for so much money.”
Shingleton said city officials were also concerned about the developers’ advertising, which read, “3% down payment required.”
When Tustin officials asked about it, the developers said it was a “minimum down,” Shingleton said.
Knowland said the advertising wasn’t inaccurate because some buyers need only a 3% down payment, but said, “I think we should look at it” in future marketing materials.
“But anyone who does any kind of research will find out exactly what is needed” to buy a home, he added.