Cheaper entry, but little equity

Traditionally, people have sought to realize the American dream of success and wealth through hard work. The dream is to pay monthly bills without worry, give their children a start to a better life and live comfortably after they retire.

But many average Americans, including many Whidbey Islanders, are struggling, squeezed by rising costs and declining wages.

“In the past it was the lower-class that couldn’t afford the American dream. Today, it is the ‘wagers,’ our police officers, retail clerks and teachers,” Donna Keeler, owner of Coastline Planning, said.

High house prices on Whidbey Island are leaving the middle class strapped. Estately.com reported the average home sale price in North Whidbey is about $315,000 while the median family income is $50,000 a year.

With a down payment of about $60,000 and $2,200 a month for a median sale house, almost half of a family’s income is spent on housing alone.

At last month’s Coupeville Town Council meeting, Keeler’s statistics showed the result is that fewer young families are moving to Whidbey.

Between 2001 and 2004, enrollment in the Coupeville School District rose. But in 2005, it was reduced by 50 students. And Keeler said the figure continues to abate.

“We’re losing our young generation,” she said. A similar trend of declining students is affecting the South Whidbey and Oak Harbor school districts.

As the young are forced out, the older generations are burdened with higher taxes.

One solution presented to the town council was the group’s “traditional community land trust model.” The concept has been around since the 1960s, but most have formed in the last two decades.

A Freeland nonprofit, the Saratoga Housing Community, will seek to make homes permanently affordable by acquiring land and selling to moderate-income residents. Saratoga controls the price of subsequent sales.

To be eligible, buyers must make no more than 80 percent of the county median income; a single buyer could make up to $43,000 and family of three, up to $55,000. They need a decent credit rating and must be a resident of the Island for at least one year.

Although Saratoga owns the title, residents are free to put up fences and plant trees. Leases are long-term, for up to 99 years, and the property is renewable and inheritable.

Of course, there’s a catch. The homeowner can’t sell the house for what it’s worth.

If in 10 years, a house originally bought at $125,000 is worth $350,000, it is sold for only $142,000.

“There is some appreciation but we want to keep it close to the cost of living so the next people can afford it,” Sandra Stipe, executive director of Saratoga Housing Community, said.

In the first 10 years, appreciation is 1.5 percent compounded annually, 2 percent for the next ten years, then 2.5 percent and so on.

“People aren’t getting into these for an investment opportunity. And unlike renting, they do get to make some money for their next house,” Stipe said.

The trying part for the group is deciding how to tax a house sold at $125,000 but worth $350,000 at market value.

The Northwest Community Land Coalition is working with the Department of Revenue for a statewide uniform way to assess these taxes, hoping to tax at the $125,000 range.

“We don’t want to burden these families. That’s money away from new school clothes for kids,” Stipe said.

So far, Saratoga has taken in donations of land and is meeting with city leaders to present their case. Their partner, Habitat for Humanity, has already built three houses.

Stipe envisions an inclusive community, filled with different socioeconomic backgrounds, such as single parents, senior citizens on fixed payment and young couples, each gaining their piece of the proverbial American dream.

“You can’t live with just rich people on this island. We need people from different backgrounds to support our economic structure,” Stipe said.

For more information, visit www.saratogacommunityhousing.org. To apply for housing, buyers must attend an orientation at the end of July.