With affordable housing options expected to be added to Lynnwood’s housing market, homeownership may become a tangible reality for some residents in the near future.
The Housing Needs Assessment found that 46% of Lynnwood households are renters and 54% are homeowners, but less than 20% of Lynnwood residents could afford to purchase the median-priced home in today’s market. Lynnwood’s average home costs $508,447, according to the assessment.
Kristen Holdsworth, the Lynnwood development and business services senior planner, says that the housing needs assessment indicated a need for rental and ownership housing options.
Lynnwood’s Housing Action Plan (HAP) addresses that homeownership is unattainable for a growing percentage of the community. While the HAP does not place a priority on renting or homeownership, it acknowledges homeownership as a key source of wealth creation and housing stability for households.
One of the city’s strategies to address homeownership being out of reach for community members is through increasing housing type variety options.
“Missing middle” housing will be developed, providing options between single-family homes and high-rise apartments, including accessory dwelling units, duplexes, multiplexes, and townhomes.
“Affordable housing can mean a variety of different levels of affordability,” said Holdsworth.
Still, providing diverse affordable housing options will not inevitably make homeownership affordable for low-income households and those in specific situations, in terms of having childcare expenses, health care expenses, or other necessities.
According to the U.S. Department of Housing and Urban Development (HUD) website on buying a home, “what you can afford depends on your income, credit rating, current monthly expenses, down payment and the interest rate.”
The Federal Housing Administration (FHA)- which is part of HUD- offers a mortgage loan designed to have less restrictive qualifications compared to conventional loans. Popular among first-time homebuyers, FHA loans are helpful for buyers with limited savings or credit challenges, as they require a lower minimum down payment and lower credit scores than many conventional loans.
However, not all for-sale properties offer buyers the chance to finance with an FHA loan. Within the city of Lynnwood, only 21% of condominiums are currently FHA-approved, equating to 1557 units. An astonishing 88% of all condominiums were once FHA-approved in Lynnwood. Overtime, FHA certifications simply expired removing this financing option for potentially thousands of units.
A local property manager wishing to remain anonymous told the Lynnwood Times that having a property/development FHA-approved opens it up to a whole new community of buyers, allowing for an increased opportunity to sell. However, some managers are hesitant to do so as they prefer the property sell to someone with a conventional loan compared to a household that qualifies for an FHA loan, believing it indicates they are more financially stable.
FHA-approved developments must also be at least 51 percent owner-occupied, with no more than half of the units financed with FHA mortgages. Homebuyers looking to finance a home with an FHA loan are also sometimes not allowed to purchase a particular place because it doesn’t meet FHA property standards of security, safety and soundness.
Holdsworth says thathousing developers and lenders will continue to determine FHA eligibility on an individualized basis in Lynnwood. All HAP and future developments will be required to comply with Lynnwood Municipal Code, including building and safety requirements.
Lynnwood’s Housing Action Plan Hearing
The Lynnwood City Council hearing for the Housing Action Plan is May 10, 2021 at 6 PM. Back in August of last year, the city hosted an online open house to share its plan. More information about the public hearing is available on the project website. The Housing Action Plan and a fact sheet are available on the project website at www.lynnwoodwa.gov/housingactionplan.
If council adopts the Housing Action Plan, the city anticipates further research and community conversations to implement the Housing Action Plan over the next five years.