Discover more from The Wausonian
An affordable housing flip
The story of a low-income house in Wausau that was sold for a profit, and how it's shaping city policy debate on affordable homes going forward
Included in a recent Wausau Finance Committee meeting was a pair of projects that aimed to employ ARPA (American Rescue Plan Act) funding for affordable housing. One of those would help the city build homes on lots it owns (many that come to the city because of fires or some other circumstance), then turn them around to an income-qualified person. ARPA funds were approved that, mixed with other funds, could help the city build four to five houses.
One comment on that proposal, from Community Development Manager Tammy Stratz, was that the city had methods it could employ so the homebuyer couldn’t just flip them. Stratz explained that most of the homebuyers were still living in the houses they bought. (Only three of the 15 in the program sold.)
Most. The reason that comment came up is because one particular house in a past similar program was just sold at a profit. 901 Stark Street just sold for around $250,000.
The story is, according to Stratz, the city obtained foreclosed property after the lender asked if they could not only donate the property to the city, but provide an additional $18,000 to the city for demolition and renovation. “It’s the first and last time someone has paid us to take over a property!” Stratz told me.
The property was a triplex in “extremely bad repair,” Stratz says. A tarp covered holes in the roof that didn’t do an adequate job keeping the rain out. The fire department ultimately used the property for a training burn.
The city then cleaned up the site and hired a contractor to build a single-family house. Once completed in 2017, the house was put up for sale to an income-qualified buyer.
Total cost to the city: $202,489.
The rules around this type of program are that the city can’t make any money on the property. They sold it for $145,000, an amount meant to make it affordable for a qualified homebuyer. The total cost to the city was around $202,000.
“Believe it or not, it took a little bit to sell,” Stratz says. Buyers were interested but either made too much or weren’t able to afford that expensive of a house. Side note: It’s part of an issue I’ve noticed with official “affordable housing”: The income requirements seem out of whack with prices. 1
It sold in September 2017 when the city finally found someone who could afford to buy it. As I had emailed Stratz to find out about the property, the owner asked about the loan amount because she was selling it.
There are no deed restrictions on the property. The city asked the homebuyer to hang on to it for at least five years, which they did. (But even that wasn’t a requirement, just an ask, Stratz explained.)
Stratz says the woman told the city she didn’t want to move but her husband was transferred for his work.
The property sold for $245,000 on Aug. 10, according to a real estate site; $100,000 more than she paid for it.
As Stratz explains, it wasn’t an intentional flip. But a skyrocketing housing market and someone who happened to be moving for a job led to a situation where someone is profiting off of a house that was meant to help someone with affordable housing.
But did they?
In Marathon County, the median home sold price since 2017 has increased by nearly $100,000, a 57% increase. Statewide the median home sale price also increased by about that much. So anyone who bought a house 5 years ago would need to take advantage of the increase in value of their own house for it not to cost them considerably to move.
In other words, if they weren’t able to take advantage of an increasing market when they sell the house, they’d be down $100,000 wherever they move to (assuming they bought another house again). But even if they rent wherever they go to, they’ll be paying higher rent since that's also been on the rise.
So then, SHOULD there be more restrictions on a property like this? Stratz told the Finance Committee last month that was a concern of the city leaders as well. Since many owners of these homes get downpayment assistance from the city, a reasonable approach might be to put an additional mortgage on the property, so that in the event of an early sale, they need to pay back the amount of assistance they got from the city.
How long? City Council Member Doug Diny said in the meeting that he felt three to four years wasn’t long enough for someone taking advantage of the program. But where do you draw the line? That’s a question policymakers will need to decide as the city charges ahead on affordable housing.
Thank you for reading The Wausonian. This piece I’ve opened up for everyone to read, but typically most long-form, in-depth stories are for paid subscribers who help support local in-depth, often data-driven journalism. They include our Big Trouble in Little Kronenwetter series and our new community dashboard feature. Click the button below to join them today!
For instance, when I first moved back to Wausau I rented a duplex apartment for around $580 per month. I had been looking to move somewhere nicer, and considered the East High Apartments. They were more than $700 per month, and I made too much to live there! At a previous job in Stevens Point, I covered a proposal for affordable housing in which the rent was around $750 — I remember telling the mayor that I wouldn’t really be able to afford to live in this “affordable housing.” (And that was 10 years ago.) Today my mortgage on a two-story house is lower than that first apartment.