Bluffton must solve home-price mystery

Bluffton officials are putting out another call for applicants for the town's six-home affordable housing project, but until they set prices for these homes, it seems impossible to match up buyer, home and loan amount.

So far, nearly 60 people have applied, but about half have been disqualified or have withdrawn their applications, town officials say. That's not surprising with the biggest blank still not filled in -- price. Town officials say they need an appraisal before they can set prices and expect to get that done in the next two months.

One thing seems sure: Given the requirements placed on federal funding for the project, including income restrictions, the town will not be able to charge what it cost to develop the homes. We expect prices to be subsidized for a project like this; the question is how much.

To qualify financially to purchase one of the homes, a single person's income can't exceed $39,100 and the income of a family of six can't exceed $64,800. The caps are based on 80 percent of Beaufort County's median income.

The town was apprised of the pricing issue last August. Consultants told officials the most the town could sell the homes for, while still satisfying the terms of the grants, ranged from $115,800 for one person to $191,850 for a family of six. The six houses in Old Town Bluffton range in size from 330 square feet with one bedroom to 1,155 square feet with three bedrooms. The total price tag for the project is an estimated $1.2 million.

Town documents on the project state the price of a home can't be more than the lowest figure among these four values:

  • Appraised value.
  • The town's development cost.
  • 95 percent of the Beaufort County median price.
  • The prospective buyer's mortgage pre-approval.
  • Town officials have talked about using sales proceeds to make up the difference between what the homes bring in and the costs not covered by the federal grants, which total $841,000. The town has pledged another $25,000.

    The consultants suggested the difference between the purchase price and the cost to build be held in a "soft second mortgage." The homeowner would have to pay the second mortgage if the home were sold before the first mortgage was paid off, the consultant said.

    The town's explanation of the program also includes a description of a lottery among qualified applicants, starting with applicants for the three-bedroom homes.

    With all that, we can see why it might be difficult to pin down prices. But the people considering buying one of these homes surely need to know something.

    The strings tied to the "free" federal money have made it that much more complicated and hard to pull off. Town officials say they know what they're doing and seem confident that all will be right in the end.

    We won't know until the town sets the prices and we see the response from the people this project aims to help and the people who lend money to buy houses.