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Harvard works with local group to try to stem flood of investors snapping up houses in Allston/Brighton

The Crimson reports how the the Allston Brighton Community Development Corp. used a $3 million grant from Harvard to gain loans with which to buy houses in Allston/Brighton to then re-sell to people on condition they live in those houses.

Ironically, one of the first houses the group bought they got by outbidding a couple looking to move from Cambridge to Brighton - they then resold the house to the couple.

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Or, Harvard acquisition of Allston-Brighton properties takes a more aggressive turn...

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There is nothing good about this scenario.

Despite an increase in price, Hein and her husband jumped at the opportunity to buy the house after meeting with Frias and learning about the homeownership program.

“Did I resent having to pay 40 grand more than I wanted to? Yeah,” said Hein. “But I got the house I wanted and I do think it’s in general a good thing for the neighborhood, I’m super happy that they’re doing this.”

Family wants to buy house. Organization buys house instead, then sells to said family for $40k more, under the guise of helping the neighborhood. And the family is somehow ok with this because in the end they got what they wanted? It's the Ace Ticket business model for houses.

Another "innovative" idea, that actually is really good in theory, executed poorly.

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"1-800-WE-FLEECE"

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I want in on this business model that cloaks itself in community benefit.

In general, when it comes to big-money interests and 'activists', look for the activists to come in line when they get personally tossed a bone. Job for you, your nephew gets bumped to the top of the list for a housing deal, a member of your congregation gets a sweet deal on a condo.

Remember: half of a university is a real estate holding/developing company, with amazing tax benefits. Look at a map, and at the methods used to acquire the vast holdings.

The placement of public housing can also keep away the worst enemy of a university-developer: a concentration of educated alumni in the neighborhood, who in numbers would block a lot of development efforts, and who can't just be tossed a community organizer job to get the rest of them in line.

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Having been down the rollor coster ride of trying to buy a home in Allston Brighton a few times, I can understand why this woman was okay with it.

That being said, I would have a hard time expecting that this house would appraise at the 40k more price which, unless the woman in question was paying cash, might have had issues at the bank.

Or is ABCDC doing the loans? (that might make more sense)

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Quick note for anyone interested in digging in, the shell corporation is called ALLSTON ESPLANADE LLC

and they also own 85-87 ADAMSON ST.

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It just says they were outbid.

I think the problem lies when people who can't afford to buy a house now lose out on an opportunity to rent in the area.

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because that's good for what, like 5 homes in that neighborhood?

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But read the article - it talks about how they leveraged that into a $5-million credit line. Since they're selling the houses they buy - not giving them away - theoretically, the money keeps replenishing itself.

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I think given the terms they mention on there website http://allstonbrightoncdc.org/2015/stable-housing/all-bright-homeownersh... I question how they could enforce htem if they were not also the loan issuerer.

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Couldn't they still sell the loan after issuing it, though?

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yes, but its probably harder to sell the loans as one off's rather than a big bunch. The banks and investment firms buy loans thousands at a time, and might not be worth it for them to just buy a few here and there.

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The state grants the city to put owner-occupancy restrictions on properties as part of the deed. The Allston-Brighton CDC just went to the Boston DND and had them add a deed restriction to the transfer of the property. Thus, the deed has a 90-year owner-occupancy restriction.

In this case, the buyers got a mortgage on the property from Fairway for $417,000, which is ~50% of the purchase price, which may answer Muerl's questions about the bank assessing the property value.

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here, let me help you spend more on that house

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The city and region could place some additional requirements on who can buy property to reduce some of the speculation.

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Or the city could cut the red tape and allow enough housing to be built to meet the demand of home-buyers, renters, and speculators.

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In a global economy and with our hyper inflated rents and housing prices, speculators will continue to flock to new developments regardless of the quantity. There are more investors than you can ever sate. The best option is to require ALL property to be owner occupied in conjunction with reforming the pricing and mortgage process - for example, as little as %5 down gets you %5 or less interest rate and capping housing prices at under $100,000. Eliminate renting all together. Yeah that will never happen either, but one can at least take some steps towards it by not allowing out of country ownership.

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it would be very easy to get around this

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Those things would be useful in some capacity and other countries already have them.

Those suggesting to just build additional housing stock are not taking it no account that there is more speculation out there than could easily be built in this area and the needed improvements to the local infrastructure that would be needed as well.

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Wait, so people from outside the country want to give us money to build lots and lots of housing, and then not live in it, and this is somehow a bad thing? Historically the most reliable way to produce affordable housing was to encourage speculators as much as possible in the hopes that they would build way too much, create a glut, and go bankrupt while the rest of us enjoy the results of their investment.

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That is not how the speculation usually works. Many of them are buying them up with no intention of selling anytime soon. They are not giving to build more housing, they are in many cases buying what already exists or what is being already built. Non locals buying properties as investments makes the housing more expensive for people that work here and you will not realistically be able to build enough to satisfy all non local demand.

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That's not a long term practical solution, without restrictions additional speculation will be able to buy the new housing that is created.

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The demand is far greater than the local market.

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Those darn foreigners from Cambridge buying up all the housing in Brighton so they can move there and raise a family.

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There are absolutely non locals who buy up housing in that area for the sole purposes of renting it out, not to mention other areas of Boston that are used as speculation. Local papers have written about this.

Your post doesn't mean it doesn't take place

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As if there is no speculation going on. Your own personal narrative just isn't taking into account what is already well known about the real estate market.

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I would be curious to see how this program works, as I can see the cash investor model taking hold across Greater Boston. My main question would be are they really helping if they are adding yet another layer of competition onto the inflated market. An extra 40k could be the make or break it for a family that is trying to buy a home. According to a quick mortgage calculator calculation that becomes almost 70k over the course of the loan not to mention that it might get also increase the time spent under PMI rules since it is pushing 20% farther away.

From a neighborhood perspective I can see how it would add stability. There is nothing wrong with renters, I am a renter myself, but renters tend to spend less time in one spot. It is good to have a mix of renters and owner occupied units and if that is skewing too heavily to renters it does make sense to give an unorthodox approach a try. With the speed some of these units come on and off the market it might actually be in an end owners best interest to pay that increase. I have seen units go on and off MLS within a day or two and I am sure lots of units change hands without ever really hitting the marketplace. If a program like this can slow things down a little bit that would be beneficial to the future owner occupant. In the case of the people in the story we do not know if it was just them and the program competing. There may have been a cash buyer involved in the triangle and it is possible that the family was never actually in the game to begin with.

My main concern would just be with pushing the price up too far. If the house cost 500,000 closing costs , according to BOA, would be about 10k on the buying side and then there would be closing cost on the selling side as well. Even if they just literally took the property and handed it over minus expenses you are still looking at an increase of 4 to 8 percent over the original price point.

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This is a flawed idea at its core. Trying to out-compete speculators at their own game only serves to feed the frenzy. The corp is becoming exactly what it is supposed to be working against. The buyer in the article makes a statement that I can't even begin to get my mind around:

Upon learning of Harvard’s role in the program, Hein laughed.

“Honestly, Harvard is a contributor to the price inflation [here],” she said. “So I think they’re wise to do that.”

So if you are one of the buyers that gets one of the hot properties then that somehow squares everything again ? What about the people who lost out, or are we to believe they were all rich foreign investors ? This bizarre scheme seems like more of the same type of manipulations that went on 6 to 8 years ago when a market correction was forestalled in the name of stabilization. Those programs benefited buyers whose only claim to worthiness was having bought real estate that hadn't been bought by the people whose taxes were going to fund their bailouts. Can somebody explain why this is any different ? This won't keep rents down or allow currently priced-out individuals to buy. We are creating another moral seesaw of public support, where a person is either helped or hindered, completely arbitrarily.

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The people who agree to buy from CDC are then locked in for 90 years, can only SELL to another owner occupant. So that means they will probably SELL at a lower price in the future, since investor-owners cannot buy the house.

Anyone buying should consider this very carefully...if interest rates go up...the property value could be much less. Also when getting a mortgage, lenders may adjust home value for "owner occupant only" deed restriction.

This is another example of interfering with a market.
Good intentions but will have unforeseen consequences.

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