NORWICH – The asking prices of three homes being built and sold by the city to replace blighted properties will likely be about 12 percent higher than previously estimated, officials confirmed Monday.
Funded with Restore NY grant money and city development dollars, once officially for sale the homes are expected to range between $99,000 and $107,000. Those numbers won’t be final until construction is finished on all the houses in the next three to six weeks.
Only families with a moderate income – between $60,000 and $70,000 annually – who have never bought a home before are eligible to purchase the properties. Rough projections in September put their prices between $90,000 and $95,000.
Mayor Joseph P. Maiurano and City Finance Director Williams Roberts said the increase in the estimated sale prices is a reflection of the finalized construction costs becoming more clear as the projects near completion.
The current asking prices allow the city to fully recover the tax dollars it invested in the properties – about $313,000 – and still offer the homes at a price officials believe is affordable.
“That’s been the goal of this project all along,” said Roberts.
According to financial calculators, a family earning $65,000 per year can afford a $216,910 home with a monthly mortgage payments (with 7.5 percent interest) of $1,516.
With a 15 percent down payment, the 30-year mortgage on the most expensive Restore NY home (at 7.5 percent interest) would be $635.93 per month.
The three houses, located 7 Waite St., 23 Grove Ave., and 52 Fair St., cost about $613,000 to construct. That includes the amount spent on demolishing the vacant properties they replaced. Restore NY funding accounted for $300,000 of the total. An expected $60,000 that would have covered demolition costs was not received.
So far, only two families have applied to purchase any of the homes. Those applications are currently being reviewed by a committee made up of local housing and banking officials. The city is accepting more, the mayor said.
The three homes have been roughly assessed at $55,500 (7 Waite St.), $59,000 (23 Grove Ave.) and $60,000 (52 Fair St.). That’s based on the city’s equalization rate (60 percent) divided by what’s been deemed as those homes’ market value in their respective neighborhoods.
Based on those assessments, an owner of one of three homes would pay between $3,574 and $3,899 in school, county and city taxes.
Not counting insurance, taxes and mortgage on the $107,000 home equal about $978 per month.
“The goal is to clean up these blighted properties in the city,” said Maiurano. “I like the idea of making the improvements to a vacant property and putting it back in private hands, back on the tax rolls.”
Maiurano added: “I think it’s a pretty good deal to get a new house, that cost $200,000 to be built, for a little over $100,000.”
A federal tax credit for first-time home buyers would lower the prices by $8,000, but that is set to expire in November. According to local real estate agents, in a best-case scenario, it takes 40 to 60 days to close a house once a contract is signed. The more likely time frame is 60 to 75 days.
“We sure want to see it done by then,” said Roberts, referring to the tax credit. “That’s what we’re striving for.”
Construction of the homes began in late June. The first property, located at 23 Grove Ave., is scheduled to be finished by the end of this month. The other two homes, at 52 Fair Street and 7 Waite Street, are expected to be finished several weeks after.
Each home is roughly 1,700 square feet, will have three bedrooms, two-and-a-half baths, and be equipped with high efficiency appliances, heat and windows.
Whoever is chosen will have to occupy the home for a period of five to seven years before they can sell it, so as to prevent profiteering.
Two of three have also been built to federal flood specifications, with foundations set two feet higher than standard requirements.