A new condominium complex is offering 33 of its one and two-bedroom units for sale at a price that is well below market value in an effort to increase affordable housing in the community. So, how ‘affordable’ are these new units and what is the catch?
A drawing will occur with winning participants able to purchase a one-bedroom /one-bath unit for $230,000 or two bedroom/one-bath unit for $286,000. While that may sound like a ‘steal’, there are also monthly condominium assessments of $400 and a parking space costs $200 monthly. So, let’s do the math, if you were to finance $230,000 (the purchase price for a one-bedroom unit) at today’s rates, the monthly principal and interest payment would be only $1,270.00. Now, if you add in the cost for a parking space and the monthly assessments, the payment would climb to $1,870.00—equivalent to the principal and interest payment on a $340,000 loan. I’m not certain that I would call this ‘affordable housing’, but it is still a great deal given the area. I am a proponent of lenders escrowing funds, in certain cases, to fund monthly assessments. Given that the assessments in this case are nearly 33% of the monthly payment on the loan for this ‘affordable housing’, the lenders may want to consider it.
If you are interested, here is a link to the article and drawing: https://www.thedenverchannel.com/news/our-colorado/new-lodo-condos-going-for-as-little-as-230k-but-there-s-a-catch