Should the City be Building Spec Homes?


The City of Flagstaff continues to build spec homes, despite real estate values dropping nearly 40% and an abundance of existing homes for sale. Yes, for those of you who did not know, your tax dollars are being used to build spec homes. This is being done in the name of affordable housing. The question needs to be asked, should the City be in the house building business and are these homes any more affordable than existing homes that are for sale?

The other day I toured the construction site on Izabel St. for a small housing project being built by the Flagstaff Housing Authority. The home I toured was a 3 bedroom, 2 bath with a 1 car garage. It is built on City owned land and is listed for $162,000 and the land under the house will be leased to the new homeowner. The concept is that by the City owning the land and leasing it to the new homeowner, the price of the home will be lower and therefore affordable. To the Housing Authority’s credit it was a very nice home. The problem is that we are not living in 2006 during the height of the housing bubble when houses were on the market for a day with multiple bids and very few houses under $200,000. It’s 2012 and housing prices have collapsed by upwards of 40%.

Right now there are many homes and town homes for sale under $200,000. There are some fine, move-in ready homes out of that housing stock. For example; a 3 bedroom Christmas Tree home listed under $150,000 that’s been on the market for over 100 days, a 3 bedroom Shadow Mountain home listed under $160,000, a 4 bedroom town home for just over $140,000. Surely many of these homes will accept a fair offer. And for that price, you get to own the land too, no ground lease. So why would one buy a home for a higher price and not even own the land?

Granted, the homes the City is building are new construction. But most people I know are more than happy to buy an existing home in a nice neighborhood with a bigger yard on land they own. Most of those homes are ready to move in and will qualify for a loan just the same as the new construction and they are lower in price! Many peope buy an existing home as their first home.

I was told by the City Manager that there is currently about $800,000 available in this housing program to build more homes. This money was transferred from the general fund years ago and can be transferred back at anytime. That means the City can use this General Fund money for anything. Perhaps instead of being in the housing business and speculating with new home sales, we should transfer this money back to the General Fund. Surely there are better uses for these tax payer funds.

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7 thoughts on “Should the City be Building Spec Homes?

  1. “Affordable” is a dog whistle code for “subsidized.” Nothing more. A city can not make housing affordable. Further, if someone is buying the house, and then renting it out, how does that help anyone? Jeff, this is why we voted you in…to stop these redistribution schemes and make some sense!

  2. I think the city is doing a disservice to the future buyers and the community as a whole. Some of these houses built or rehabbed a few years ago, are on the market for 15% less than the city sold them for. So the city is in competition with the owners of the homes that they sold to in years past. I wonder if the home you toured was less than $130.00 a square foot? That is the price for a new home in the city with your own yard and no encumbrances on selling it in the future.
    Housing is one thing that should be left to the private market. The housing program is more of a “jobs” program for the administrators than anything else.
    Thank you for bringing these issues up in your blog and to the council and administration.
    It is refreshing to see someone on the council that is willing to look deeper to see where our tax dollars and the direction of the city are going.

  3. How does the Housing Authority even have the jurisdiction to build houses? I thought it was only their job to give permits and decide on building standards and what not.

  4. Oh, I just want to make one more point (really, just one more). Isn’t it communistic for the government to own the land, with the people just leasing it from said government? Some argue that property taxes are a form of government “ownership” of the land. If that argument can be made, then surely THIS little fiasco should be considered more than unacceptable to those who advocate economic liberty.

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