Philadelphia is essentially giving away city-owned land as part of a plan to build 1,000 homes for first-time buyers on limited incomes and reduce the city’s affordable housing deficit, officials said Thursday.
The Turn the Key program is the latest and biggest step yet in the City Council’s Neighborhood Preservation Initiative, a $400 million plan to build and preserve affordable housing, help first-time buyers home and reviving commercial corridors at a time when housing is becoming increasingly unaffordable for Philadelphians.
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The program will begin with $7 or $8 million in funds in what is Philadelphia’s biggest investment in affordable housing in decades.
“It’s so important that we step in as local government,” Anne Fadullon, the city’s director of planning and development, said at a press conference Thursday outside two vacant city-owned lots in the West Philadelphia that will eventually contain approximately 40 homes.
The 1,000 housing units will be spread throughout the city. Philadelphia is inviting proposals from developers to build energy-efficient three-bedroom, 1½-bathroom homes for sale for a maximum price of $250,000. Philadelphia homes sold for a median price of $272,750 in March, according to Berkshire Hathaway HomeServices Fox & Roach Realtors. Homeowners will pay around $1,200 per month for their mortgage.
Building on public land reduces development costs, which lowers house prices. The city plans to sell the lots for a nominal fee.
Construction of the first 100 homes will likely begin within the next few months, Council Chairman Darrell L. Clarke said. The city will seek proposals from developers on an ongoing basis through the end of the year. Officials estimate that the sites will contain an average of 30 homes each.
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Low incomes mean that many Philadelphians cannot afford to buy the average Philadelphia home. This is all the more true since mortgage interest rates have reached the highest levels for more than a decade. And more than half of the city’s renters are cost-burdened, meaning they spend 30% or more of their income on housing. House prices and rents continue to rise rapidly.
Home ownership is the most common way for households to build wealth. Owning a home can help people pay for their education, start businesses and pass on wealth to younger generations.
Council member Curtis Jones Jr. said it’s unacceptable that affordable housing is increasingly out of reach for Philadelphians.
“I want it to be a place where working families grow, create memories and become part of the existing community,” he said.
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The city plans to use funds from the Neighborhood Preservation Initiative to provide loans of up to $75,000 to reduce housing prices, so properties are affordable for households with incomes between 60% and 80% of the median for the region. That’s up to $75,600 for a family of four. Portions of the loan will be canceled over time.
Eligible residents cannot have owned a home for the past three years and will need to take free housing advice.
City officials estimate that building the 1,000 homes will result in a $300 million increase in land value added to the city’s tax rolls.
Rick Sauer, executive director of the Philadelphia Association of Community Development Corporations, said stable, affordable housing is key to creating a fair city for low- and moderate-income residents and for black and brown residents.
“We need bold new initiatives to create opportunities for more affordable homes here in the City of Philadelphia to benefit all of our residents and to help create thriving communities,” Sauer said. “We know there’s still a lot to do, but it’s definitely a step in the right direction.”