Thanks to ‘Zerodown’ for (aptly, given his handle) pointing out the ‘Attainable Homes‘ program now running in Calgary. The following from their website:
“How it Works”
Over the last few years, housing prices have increased significantly yet Calgarians’ earnings haven’t kept pace. This has created an affordability gap. High rent payments and other monthly expenses leave little to no ability for many people to save for a down-payment and own a home. Attainable Homes Calgary is here to bridge the affordability gap and help hard working, middle-income earners like you, get out of renting and into home ownership.
Through our program, we do three things a bit differently in order to provide Calgarians with attainable homes:
- We partner with reputable local builders to provide condominiums and townhouses at a price that is attainable for middle income Calgarians. We define ‘middle income’ as having an annual household income under $80,000.
- We give you the required down-payment (yes, it’s a gift!) and guide you through the entire purchase process. You will need to come up with $2,000 of your own money as a deposit, which is put towards the purchase price of your home.
- We re-invest a portion of your home’s appreciation back into the Attainable Homes program to help other Calgarians buy a home. You have the freedom to sell your home at anytime.
Let’s work through an example:
$240,000 Home at Market Value:
|Attainable Home purchase price||$220,000|
|Less 5% gifted down-payment* from AHCC||($11,000)|
|Your minimum deposit||$ 2,000|
|Your mortgage (from lender)||$207,000|
*the gifted down-payment becomes a forgivable loan.
When you decide to sell your AHCC home, you and AHCC share the appreciation in value (you keep more, the longer you own your home):
|Years of Ownership||Appreciation to Home Owner|
|0 – 1 year||0%|
|1 – 2 years||25%|
|2 – 3 years||50%|
Let’s say you stay in your AHCC home for four years and the appraised value is now $254,700.
|Market Value of your AHCC home||$254,700|
|Less your original deposit||$ 2,000|
|Less your first mortgage amount||$207,000|
Your share of the $45,700 appreciation would be $34,275 (or 75%).
Our share of the appreciation, which we’ll reinvest in the program would be $11,425 (or 25%).
What a great opportunity… everyone wins!
Get on the path to home ownership! For more information or to book an appointment with a member of our sales team, contact us!
Not seeing it as sufficient to subsidize mortgage insurance through CMHC, governments are now gifting the down-payments on which those mortgages are extended. This is complete insanity. Leverage upon leverage.
Should anyone who can only come up with $2k ever be given a loan of $207K?
Clearly the government is also aiming to support “reputable local builders” and others. See the program’s partners and sponsors.
We note that there is no provisor on the “How it works” page for the possibility of future price drops. Possibly:
“Let’s say you stay in your AHCC home for four years and the appraised value is now $140,000.
You still owe $200K on the mortgage.
You couldn’t come up with more than $2K to buy the home, but now you’d need more than $60K to sell it.
You mail us the keys and leave the province.
Everybody wins… (no.. wait..!)”
Homes will be more affordable for all when their prices fall to levels reflecting fundamental values.
Endeavours like the one above simply facilitate citizens overextending themselves to buy overpriced properties.
If the ‘City of Calgary’ understood the situation, and really cared about “middle income Calgarians”, they’d not promote this program.