When AJ Swentosky, his wife and two young children went looking for a home to buy, what they found in their price range — a 700-square-foot abode with two bedrooms and one bath — was “going to be tight.”
Instead they kept renting, which worked for a few years until their landlords let them know they were thinking about selling the home this summer. So the family started looking in earnest again, hoping to find a place with two or, if they were lucky, three bedrooms.
And they found one.
The family is now under contract to buy a two-bedroom, two-bath home in Rafter J, thanks in part to a $1 million pilot program that aims to pay local workers up to $150,000 in down payment assistance to deed-restrict a home, making it available solely to local workers. The program also offers existing homeowners up to $150,000 in exchange for the same deed restriction, a tool that essentially limits resale to qualified buyers.
The town and county “workforce ownership” deed restrictions used in the program define those buyers in part as households earning 75% of their income from a local business. They also prohibit homeowners from owning other residential real estate within 150 miles of Teton County and cap a property’s future resale price by limiting a home’s appreciation to the Denver-Aurora-Lakewood Consumer Price Index or 3%, whichever is lower.
Swentosky, 37, works as an administrator with Teton County School District No. 1. He partially credited the program for his family’s pending purchase.
“This probably would have been three or four years out for us,” he said.
April Norton, director of the Jackson/Teton County Housing Department, said the program aims to do two things: House more local workers in Teton County and preserve Jackson Hole’s existing housing stock and character.
“Most working families can’t afford even a small home that comes up for sale,” Norton said. “Here, there’s an opportunity to help them get in and stay in that home and, when they sell it, require them to sell it to a working family. That seems like a win-win to me.”
Norton said she generally assumes households can afford a home that costs around five times their annual income. Under that rule of thumb a four-person household making Teton County’s median family income of $110,700 could afford a roughly $550,000 home.
Anne Cresswell, executive director of the nonprofit Jackson Hole Community Housing Trust, previously told the News&Guide she thinks affordability for the local workforce maxes out around $650,000. Others have argued it goes up to $750,000.
But in Jackson Hole, home prices tend to far exceed those thresholds. That’s been especially true in the past year or so, which has seen people from all over the country snapping up real estate. The market is hot, and homes are hard to come by.
The average single-family home sold for $3.7 million in 2020 (the average in 2019 was $2.6 million), and an average condo went for roughly $1.5 million ($800,000 in 2019), according to the Jackson Hole Report and Jackson Hole Sotheby’s International Realty. As of Tuesday morning there were no single-family homes available for under $1 million on the MLS.
Realtor Devon Viehman attributed part of the problem to supply.
“What can you go buy right now if you’re local? There’s a couple condos under a million bucks,” she said. “I think that’s the struggle. There’s no inventory.”
Making a down payment work
Swentosky and his family have been in the Jackson area for more than seven years.
They moved from Colorado Springs after Swentosky got a job with the school district as a psychologist. The family lived in Alpine at first but later moved to Jackson Hole.
Swentosky said his family brings in between $170,000 and $180,000 a year, but student loan debt he described as a “mortgage in and of itself” complicates that. The family has been renting since they moved up here and looking for a home of their own.
Homes deed-restricted by the Housing Department or nonprofit Housing Trust have been “few and far between,” Swentosky said. The market is also unforgiving. Without outside help, putting a down payment together for a market-rate two- or three-bedroom home was more or less off the table.
“If you’re looking at a one million dollar home or $900,000 home, it’s hard to just stash away $200,000, at least for a lot of middle class families,” Swentosky said.
But the possibility of an extra $150,000 upped the Swentosky’s ante in the local real estate game. It increased the amount they’d be able to put toward a 20% down payment and consequently changed the type of home they could afford.
“A lot stronger down payment opens up a lot more options for us,” Swentosky said.
Viehman said down payments are often a problem for locals trying to buy homes.
“You’re paying 4,000 bucks a month in rent,” she said. “You can have a mortgage for that. But the problem is, it’s really hard to save up 20%.”
Glen Esnard, a former Teton County planning commissioner who spent 25 years in commercial real estate, agreed that down payment assistance could be pivotal.
“If somebody wants to buy a house or a townhome for $1.3 million [or $1.4 million or $1.5 million] you can get in with almost no cash,” he said. “You’re [deed] restricted, but you don’t care because now you can write off your interest. And it gets you in the game.”
Benefits for homeowners?
But Esnard felt the program’s advantages for existing homeowners aren’t as strong. Encumbering an already owned property with a “workforce” deed restriction in exchange for cash might be less enticing given Teton County’s skyrocketing real estate.
The average price of single-family home sales shot up 42% between 2019 and 2020 per the Jackson Hole Report. A roughly 3% annual cap on appreciation would limit how much a home’s value increases and how much homeowners could make if they sold.
“If I can be incented to buy into a house, convert it to deed-restricted workforce housing, and I need to do that to own a home, I’m doing that all day long,” Esnard said. “If I own a million dollar house and somebody is going to give me $150,000 to sacrifice the future appreciation of that million dollars — not a chance in hell.”
She acknowledged that placing an appreciation-capped deed restriction on a home in Teton County is a tough bit of financial calculus. But, she said some of her friends have been talking about doing just that.
“They feel like it’s a way for them to leave a lasting impact on affordable housing in our valley,” Viehman said. “It’s a chance for people to put their money where their mouth is.”
Norton acknowledged that a homeowner in the scenario Viehman described would have to be “altruistic.” But she saw another reason people might take advantage of the opportunity to be paid up to $150,000 in exchange for a deed restriction.
“The other type of person is somebody who is house rich but cash poor, and instead of selling their house they want to stay in it,” she said. “But they could use $150,000 for whatever reason, and they’re not going to refinance for whatever reason.”
The housing preservation program targets households that earn anywhere from 100% to 300% of median family income, Norton said.
The Housing Department’s “affordable” units and the Housing Trust’s properties are reserved for households who make under 120% of median family income, which is $92,988 for a single-person household, and $132,840 for a four-person household. The Housing Department’s existing “workforce” units, by contrast, have no income restrictions, and neither will homes deed-restricted under the pilot housing preservation program.
Norton sees down payment assistance as a way to expand options for aspiring homebuyers.
In “the ‘affordable program’ you have to wait for something to come available,” she said. “This program, it’s available now.”
But the catch is: Applicants still have to find a home they can afford.
The $1 million allocated to the pilot program likely won’t last long. Five people have been preapproved to receive funds if they can close on a home and, if six households receive the full $150,000 allowed, only $100,000 would be left for other applicants.
Depending on the pilot’s success, the Jackson Town Council and Teton County Board of County Commissioners could inject more money. The $1 million is coming from a $5.5 million specific purpose excise tax or SPET measure voters approved in 2019.
So, Norton said, “we could in theory use all of that money on this program if it were really popular.”