Editor’s note: Part of an investigative series on housing costs in Southington.
SOUTHINGTON — Margaret Fernandes, general manager at Anthony Jack’s restaurant on Center Street, is finding little in her search for a Southington apartment or house.
Fernandes, a Bristol resident, wants to be closer to work and has been looking for a three-bedroom apartment or two-bedroom house. The apartments with three bedrooms have cost between $1,600 and $2,200 a month. Houses that are affordable for her at $225,000 are in poor condition.
“There is nothing available that is not over priced,” Fernandes said. “I'm holding off for now.”
Housing that meets the state’s guidelines for affordability exists in Southington but housing professionals say it’s getting harder to find.
State officials set a goal for affordable housing intended for those making less than the area’s median income. Southington hasn’t reached that goal but that’s due in part to the state’s affordable housing definition that goes beyond just the cost of an apartment or house.Affordable for a family of four
Glenn Chalder, a consultant with Planimetrics, was commissioned by the town to conduct a state-required study of local affordable housing.
State officials created a formula to determine if housing cost is affordable. It starts with 80 percent of the state’s median income. Chalder said the latest data show that equals just under $90,000 in income for a family of four. While not considered low-income, families making that amount annually might have trouble affording housing without putting a financial strain on other areas such as transportation and food.
Housing should consume no more than 30 percent of a household’s expenses, according to state officials, limiting the monthly cost of housing considered affordable at $2,252 for that family of four earning $90,000. That housing cost of $2,252 includes a mortgage, taxes, insurance, association fees and utilities for a house or condo.
For apartments, the maximum rent considered affordable is also capped by fair market value. That cap is more than $1,900 per month for a three-bedroom unit.No longer affordable?
If cost were the only factor in determining the number of affordable units in town, Chalder’s report suggests Southington would easily meet the state’s goal of 10 percent.
With a total of about 18,000 housing units, Southington has an estimated 8,000 houses and apartments that would qualify based on cost alone. But state officials also require that affordable units, to be counted towards the goal, have a deed-restriction preventing the rent or cost from rising above affordable limits.
Chalder said that’s an important consideration since the market can and has swung to make previously affordable apartments and homes cost-prohibitive for some people. He cited recent increases in housing and rental costs that weren’t factored into the study’s data.
“Over the last couple of years … these non-deed restricted units have become less and less affordable,” he said.
Chalder derived estimates of rental costs and home values from the American Community Survey, a program of the U.S. Census that interviews one out of every 500 households in a community. The number of units considered affordable was based on the results of interviews conducted from 2015 to 2019.
He said the data isn’t very good, but it’s all planners have to estimate rental costs and home values townwide. It’s likely there are now fewer naturally occurring affordable housing units than the American Community Survey results would suggest since it took place before the COVID housing spike, according to Chalder.State goals and local frustration
In the last survey of affordable housing conducted by the state, Southington had 5.3 percent of its housing considered affordable. The goal is 10 percent.
In towns that don’t meet the goal, developers can invoke a state statute that allows them to largely disregard local zoning regulations if a project contains a portion of affordable units.
That hurts local planning, said Planning and Zoning Commission Chairman Bob Hammersley, a Republican. Invoking state statute, a builder can put a major project in a highly residential area.
Hammersley is also frustrated that the town can’t count even a single unit of the 8,000 estimated affordable apartments and houses in town since they’re not deed-restricted.
“I don’t think the way the state defines affordable housing is an accurate or fair way to towns like Southington or accurately reflect the affordable housing in our town,” Hammersley said. “It’s all these restrictions put on what’s affordable and what’s not affordable.”
Hammersley said he hoped to have a conversation with state officials about a better way to determine a town’s affordable housing supply. Southington has affordable housing.
“What we don’t have is available housing in town,” Hammersley said.Rising rents and competitive housing markets
Diana McDougall, a real estate agent in Southington, said finding a house at the lower end of the market is difficult.
To keep within the affordable guidelines for a family of four bringing in about $90,000 annually, McDougall said, would require a purchase price in the low $300,000s since interest rates have risen to around 5.5 percent.
“You’re looking at a house in the three’s, in the upper two’s, though there are very few houses in that price range,” she said. “There’s not a ton of them, but they’re there.”
She’s warned buyers about purchasing at the top of the market since rising interest rates will bring down housing prices. Unusually low interest rates let people buy more house than they could have normally.
“You see those same people, five, seven, 10 years later and they look at you say, ‘What do you mean I can’t get what I paid for it?’” McDougall said.
Chalder said the loss of equity in such a situation for a lower income family can be “destructive.”
The housing crunch has also driven up rents and reduced availability.
Southgate Apartments on Old Turnpike Road is advertising two-bedroom units for between $1,250 and $1,350 per month, excluding heat and electricity. However the units are listed as “coming soon.”
“You can’t get anything in Southington for much less than $1,400 for a two-bedroom apartment,” McDougall said. “Anything that was $1,000 to $1,200 is no longer in existence.”
For a family of four needing a three-bedroom, McDougall said the likely price is $1,800 per month.
Despite recent increases, McDougall said both houses and apartments in Southington were more affordable than surrounding towns such as West Hartford and Farmington.
“Our tax rate is very attractive,” she said. “For the dollars, it’s more reasonable here.”Fewer CHFA mortgages
Recent low interest rates prompted many homeowners to refinance and drop their monthly payments. While saving residents money, Chalder said that may actually decrease the number of affordable housing units counted by the state for Southington.
Homeowners who bought homes through the Connecticut Housing Finance Authority were eligible for down payment assistance and other benefits if they qualified. Those mortgages are considered affordable by state officials.
When refinancing though, those homeowners switched their mortgages to non-CHFA loans. CHFA and USDA mortgages amounted to more than 350 of the town’s total of 967 affordable units.
“The issue is that the people who had CHFA mortgages are refinancing at lower mortgage rates or selling to get the capital gains,” Chalder said.
“People are doing exactly what anybody would do in that situation.”
Reporter Jesse Buchanan can be reached at email@example.com.