Last Wednesday, legislation filed by state Sen. Paul Feeney (D-Foxboro) was heard during a public hearing before the Joint Committee on Housing. S.874, “An Act establishing the missing-middle starter home development and home ownership program,” seeks to increase the Commonwealth’s production of ‘starter homes’ that put homeownership in reach for hard-working, middle-class families.
The bill establishes a starter home program to be managed by the Department of Housing and Community Development and in partnership with the Massachusetts Housing Finance Agency. The program creates a Starter Home Development Fund which is designed to provide subsidies to developers to build owner-occupied “starter homes” for households whose incomes are between 80 and 120 percent of the area median income. These subsidies would not exceed 35% of the total cost of eligible development and could be used to bring down costs for homebuyers, if not fully used during development.
The legislation also stipulates that equity may stay in the home in order to keep the sale price affordable for future buyers, either by ensuring the subsidy remains with the home to offset the cost to future homebuyers, or through the use of a housing subsidy covenant at the time of purchase that preserves the affordability of the home for a period of not less than 99 years.
Starter home, as defined in Chapter 40Y, Section 1 of the Massachusetts General Laws, is a “single-family home not exceeding 1,850 square feet of heated living area.” These residences are smaller homes or condo units that provide first-time homeowners with enough space and amenities, without leaving the buyer in a crippling financial situation. Starter homes are generally the first home a buyer purchases in their lifetime as they build wealth to save for their forever home.
“For many working-class Massachusetts residents, the idea of buying a home on middle-income wages and achieving the American dream has turned into a nightmare,” said Feeney in a statement.
Decades ago, starter homes were built at an extremely high rate, yet these entry-level homes are disappearing from the market as builders focus on more lucrative projects. The gap in affordable construction has made it difficult or close to impossible for many first-time buyers to afford homeownership. This bill gives developers the financial backing they need to make building starter homes worth their time so that the Commonwealth can increase its starter home stock and provide reasonably priced home-ownership opportunities for individuals and families looking to start a modest life with equity in their home.
“We are at a critical time in the Commonwealth’s housing crisis, and we must act swiftly to address this gap in middle-class housing as young people and families contemplate their futures in Massachusetts,” Feeney said. “Buying a home should not be a luxury reserved for the wealthy, and I am eager to continue advocating for the needs of the “missing middle” this legislative session.”
