Housing Complex

The City Forces Developers to Sell Cheap Condos. But Can You Find Them?

This piece will appear in this week's print edition of the Washington City Paper.

In mid-June, Angela Peltzer moved into her brand-new condo at 14th Street and Florida Avenue NW with views of the Capitol, the Washington Monument, and possibly the Anacostia River.

“I think I can see the new stadium,” she says.

The purchase is a coup for someone who never thought she could afford a condo, wasn’t looking for one, and ended up paying below market price.

“I thought I was so far away from it,” she says. “My career had been in nonprofits and traveling around, and I never had any money.”

But last year, after attending a women’s seminar—“something along the terms of financial management, creating wealth”—she heard a lucky tip from a fellow attendee: A new building called the Solea was holding a lottery for designated affordable condos.

Solea is a yellow and gray six-story property with an unorthodox South-Beach-meets-Soho look. Remaining two-bedroom units are currently listed at $549,900; one-bedrooms are going for $379,900.

Peltzer paid $234,000 for her one-bedroom unit. Currently an employee at the Department of Labor, she met the requirement of making between 50 and 80 percent of the area median income, $99,000.

Peltzer’s now informing all of her friends about the affordable-condo process—which is key because the average D.C. real-estate agent doesn’t know or isn’t talking about the deals. Nor is the average developer, it seems, or the average city housing official.

“None of our agents that I know of have sold one,” says Don Denton, head of the Capitol Hill Coldwell Banker office. “It’s not on our radar.”

“Generally, I would agree that they’re not well-marketed,” says Lindsay Reishman, who specializes in luxury condos. “If I were a consumer, I’m not sure I would know if they existed.”

Valda Crowder, however, is one D.C. agent who makes it her business to find out about these elusive units. She doesn’t have access to some secret database. She’s not treating developers to lunch on the company plastic. She basically sniffs them out—as early as possible.

“Usually when I see a development going up, I’ll call or look it up in the records,” she says. “Anything that’s put up near a Metro stop” is likely affordable, she says, because it may have been built on land previously owned by the city and provided to the developer with strings attached.

But even with cold-calling on new buildings, there’s potential trickery. Crowder, who served as Peltzer’s agent, suspects the sales staff may keep the receptionists purposely ignorant about the affordable units. Then desk-workers can honestly say, “I don’t know what you’re talking about,” Crowder says.

“I believe that one of the reasons they keep this quiet is they don’t want to sell them at affordable rates,” says Doug Carter, a real-estate agent who handled Solea’s initial sales and has also represented buyers.

Quietly, a lucky few figured out how to get in at the right time. Besides Solea, affordable units have sold at City Vista in Mount Vernon Square. Crowder and Carter both heard rumors of similarly priced units at Kenyon Square in Columbia Heights and Union Row near 14th and U—but the news leaked after all the cheap condos had been sold, they say.

More recently, Capitol Quarter, a 200-plus town-house community near Nationals Park, held its first lottery for workforce housing units (several more will occur as properties are completed in the coming years). During the first lottery, 58 qualified buyers vied for 18 homes.

But Capitol Quarter was a special circumstance, says AJ Jackson, a representative with developer EYA.

Unlike the typical developer, his group partnered directly with the D.C. Housing Authority, which provided a list of pre-approved buyers interested in town houses. The majority of people who qualified for the first lottery were former public-housing residents with incomes that no longer qualified them for public housing, according to Dena Michaelson with the Housing Authority. The agency walks them through pre-approval for a mortgage so they’re good to go if an opportunity comes up.

Absent of handholding from the Housing Authority, the city acknowledges the search can be perplexing.

“There was no uniform process in place to let prospective homebuyers know the location or
availability of affordable units,” writes Sean Madigan, a spokesperson with the office of the Deputy Mayor for Planning and Economic Development, in an e-mail. Lotteries weren’t required and marketing “has really been at the discretion of the developer who created the units.”

In mid-May, the mayor’s office issued new zoning regulations that could make finding these units easier.

Under the new rules—which are supposed go into effect by early fall—the Department of Housing and Community Development (DHCD) will review all buyers who register with the agency to see if they meet “certain income and household-size eligibility requirements.”

Then DHCD will notify registered people when lotteries occur. In addition, developers will be required to list their affordable units on a city Web site, dchousingsearch.org. The city will also “contract with a community-based organization to assist with outreach, housing counseling/education,” Madigan writes.

Agents, however, are not required to engage in “counseling/education.” On many projects, the developers aren’t forced to provide a commission to buyers’ agents on the affordable units, as they might be with a normal sale, so the incentive can be lacking.

Developers also have another trick: Strict viewing schedules, says Crowder.

“One building would only show their affordable units from 10 a.m. to 3 p.m. on Monday to Friday,” she says—not exactly the best time for your medium-income paper-pusher.

Despite the hurdles, Crowder says she’s had four or five clients enter into contracts for affordable condos. Two went to closing. She’s informed plenty of others about various lotteries.
Peltzer says several of the friends she’s talked to about how it works are now on the hunt.

“It’s really something you need to educate yourself about—or find someone who knows about it,” she says.

Image by Darrow Montgomery

  • Sir Spicious

    What you really can't find the answer to is what happens when the original buyer wants to sell. Do they get to sell at market rate, and potentially realize huge upside? Do they have to sell it to a new person eligible for affordable housing? Who manages that process?

    Also, I think you're leaving out details. I believe that the $99,000 AMI is for a family of 4, and generally goes down 10% per person. So the 80% AMI for 1 person is a salary of ~$55400 (80% of 70% of $99K), not 80% of $99K (~$79K).

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  • Tania

    @ SirSpicious: no, most of the affordables are covenanted so that you can't reliaze a huge gain by flipping them at market.

  • Sir Spicious

    Again, covenanted by whom? I've worked in development, ask 5 people who administers the program and you'll get 5 answers.

  • http://www.anacostiariverrealty.com/ Darrin D. Davis

    Hmmm...Very interesting.

  • Fred

    “Usually when I see a development going up, I’ll call or look it up in the records,” she says. “Anything that’s put up near a Metro stop” is likely affordable, she says, because it may have been built on land previously owned by the city and provided to the developer with strings attached.

    Oh CP. Why don't you EXAMINE these things more. Turn over that rock. Look underneath it.

    The city GIVES AWAY public land to developers (see yesterday's joint public hearing with Cheh and Brown). They truly GIVE IT AWAY, and in return for what? two, three "affordable" units. The definition in this article of affordable, is not very affordable to me.

  • Sir Spicious

    2 things:
    1. Land around Metro stations is often owned by Metro, not the city. And Metro definitely doesn't give away land, as the other 2 jurisdictions with board members (wherever the land is) won't allow it. Nor does the city just give it away. They get something in return that they value, oftentimes affordable housing units.

    2. Affordable isn't defined by the city, or the developer, or the blogger. It is a function of the area median income, as defined by HUD.

  • Fred

    check out yesterday's hearing. The city does indeed give things away. You're wrong.

  • Advocate for People not Property

    All of these affordable units have 15 to 20 years resale restrictions on them. So might feel that you're getting a bargain now, but in 7 years, when you're starting a family or need to relocate for a job or want to use the home equity to pay to further your education, what happens to you. Oh yeah, you're stuck. Look at what's happening to owners of ADU, as they are known in the industry, they got a bargain 2 years ago, but now that the market is tanking in "hot" areas like Columbia Heights, what they paid for their affordable unit is more than what "market" rate units are selling. Also, the quality of the unit is way inferior to anything else in the complex. It's a good program, but long-term restrictions need to be reduced to 5 or 10 years.

  • Advocate for People not Property

    I meant to say, look what's happening to ADU owners at Kenyon Square. City Vista isn't far behind. Imagine a family of 4 paying quarter of a million dollars to live in a 2 bedroom apartment, that's insane...

  • Advocate for People not Property

    Fred, you're mistaken. It might seem that land is given for free, but in reality, the developer works out a trade with the City or landover. It's never as simple as the papers make it seem.

  • Fred

    That's funny! The papers (Post, for example) never tell you that the city gives away property. Yeah, yeah, some dinky little requirement here or there, but often NEVER approaching "market value." Take a look at yesterday's hearing.

  • Fred

    Your name is very disingenuous.

  • Advocate for People not Property

    Why does my name seem disingenous, because I prefer people knowing the truth about these horrific restrictions before making a costly mistake. Oh ok, I guess that makes sense. You don't know how this stuff really works so don't try to gather tidbits here and there and then try to palm it off as you being some housing guru who knows everything. The City will not give away valuable land without requiring something in exchange. 20% of a 100 unit development equals 20 units, not 2 or 3. Most of the time, there are other requirements for mixed-use property (certain commercial space has to go to local businesses). I admire the City's program, the thing I'm harping on is what long-term restrictions do to people. Unless you live a unit with them, you have no authority to speak otherwise...

  • Fred

    Indeed I am not a housing expert. The city gives away shit all the time. Where have you been?

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  • I heart Bob

    Where I've been? Here trying to explain to you that it's not as simple as the papers make it out. But I guess that hasn't done much for you so, whatever. Ignorance is bliss... must be nice Fred.

  • Fred

    Oh, whatever to you too. I'm not reading the papers. I'm looking at the COUNCIL'S HEARING SCHEDULE YOU BOOB. Why don't you too? There was a hearing last week that I've mentioned several million times, in which they gave away to Donatelli at least one property. Three or four others were on the agenda, I don't know if they were giveaways too. Why don't YOU do some research?

  • I heart Bob

    I work in the field you tard... I'm explaining to you that though Donatelli make be "given" a parcel of land, it's not free. There are so many strings attached to it, that after everything works itself out, he will end up "paying" for the parcel. It's never as simple as a Developer strolling in to his buddie's office at the Council and being given a large parcel to develop 300 units. It just doesn't work like that. When the legislation comes out, read the fine print. It should detail the requirements, the restrictions, the return. I did my research, I don't base it on a 5 minute hearing, where you get little information idiot. So, whatever back to you, tard boy Fred. I know, mature.

  • Long Time Rez

    "When the legislation comes out, read the fine print. It should detail the requirements, the restrictions, the return."


    You may work in the "field" but I'm in agreement with Fred on this, having lived and worked in DC for 30 years and been intimately involved with community affairs for the last 10 years. It IS as simple as a developer--especially if he or she is a big contributor--strolling into a CM's office and coming to an understanding. Sometimes it's even easier, especially if no one is paying attention.

    The cronyism and sleaze is knee deep at Wilson.

  • Fred

    Again Bob. You're just plain wrong. Look at the giveaways in the past. But excuse me, yes, there was money exchanged, but it was very very little, which in my mind, if I was paying for it, would indeed qualify as a giveaway. Schools turned into lofts on capitol hill sold for less than half a mil, and then the individual lofts sold for 300K. I could go on and on, but I think you just prefer to launch your invective. Something is making you extremely angry. Perhaps it is the truth.

  • I heart Bob

    I guess if that's freakin simple, then why isn't even Tom, Dick, and Harry doing it. Why don't we do an experient, go ahead, form a development corporation, $70. Then stroll into a CM's office and get that vacant school building that you will convert into $300k lofts. Let's see how that works out for you. I agree with Long Time, because cronyism is rampant and will continue in all walks of politics, especially in DC, but it really isn't as simply as the CM's drinking buddy getting a $30 million development because the CM says so. It's way more complicated than it seems...

  • Fred

    You're right Bob.

    "To get things going, Mayor Adrian Fenty's economic development team heavily subsidized each of the projects with property and cash, sometimes for more than half of the overall cost."

    Regarding the 5 land deals the city was doling out recently. They were pulled from the Council's agenda till the fall.

    Biz Journal

  • I heart Bob

    Well, thank you Fred, "half of the overall cost" is still not free. The City stinks of cronyism, favoritism, and outright illegal dealings, but for the most part, however it transpires, there is a payment. The problem is that because certain developers gets priority over others, a truly competitive marketplace does not exist. So, a developer charging $300k for a loft, is making a lot more profit than if he had had to compete on the open market for the unit. The ones who pay the price, always, are the buyers...

  • Fred

    Did anyone else feel that breeze?

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