The students in Nicole DiGeronimo’s first-time homebuyer classes are increasingly older with a little more money saved up. They still can’t buy a home in Maine.
“These are people that probably never anticipated it would be so difficult to purchase a home,” DiGeronimo, who directs Avesta Housing’s homeownership center, said.
These homebuying hopefuls, often aged between 30 and 40 and making well over their area’s median income, represent the “missing middle.” They earn too much to live in income-restricted rental housing but can’t compete in the real estate market that has been overheated since the beginning of the COVID-19 pandemic.
It has inspired a change in strategy for Avesta, the Portland-based nonprofit group that is also northern New England’s biggest affordable housing provider, which will begin creating homeownership options geared toward middle-income earners. Avesta is in touch with towns as far away as Machias about offering condos and other properties for sale.
The group has dipped its toes into homeownership before, with two condo projects it built in the 1990s and in 2012. But this launch of two formal programs marks a major shift.
The first program, dubbed “A Path Forward,” will rehabilitate and then resell blighted single-family homes around Maine to first-time buyers at a below-market price of $210,000. The other, “Domus,” will construct conventionally financed buildings of small, one-bedroom condos in southern Maine to be sold at $285,000 a unit.
“Federal uncertainty makes this a good time to diversify Avesta’s portfolio,” said Jeff Levine, an MIT Professor and former Portland city planner. “The middle-income market is clearly experiencing stress in Maine, so it’s also a good area in which to develop new programs and products. I’m glad to see Avesta looking to do so.”
There is a business reason behind the programs. Avesta needs to diversify its revenue as the tax credits that power its core business of low-income housing have grown costlier and more competitive. It also needs to find alternatives to subsidy-reliant housing due to uncertainty around federal funding in the era of President Donald Trump.
Both of these new programs are designed to be self-sustaining. The revenue from home sales will be used to build and rehabilitate more properties. Once the programs grow, they could eventually help fund other aspects of the organization.
“A conventional-finance building like Domus can close faster, can get built faster, and can get sold faster. And that matters: time is money,” Avesta’s interim CEO, Eric Boucher, said.
The Domus program, which is nearing final planning board approval for its first 45-unit building in Westbrook, works because each condo is only 500 square feet. Some are sold at a market rate to subsidize the rest.
“That’s the only way we can do it,” Portland-based developer Jack Soley, who partnered with Avesta and Hebert Construction on this program, said. “A 1,000-square-foot unit costs well over $300,000 today just to build it. I’m just talking hard costs, not including all the soft costs and architecture costs and land costs and bank costs and everything else.”
The condos won’t be deed restricted, but Soley said their affordability to middle-income earners will be “naturally occurring” because they are small and will not attract luxury homeowners.
A Path Forward, Avesta’s other program, will have some deed restrictions in place so that homebuyers can’t flip properties. But DiGeronimo said there will be a percentage-based maximum sales price formula that will ensure homeowners can build equity when they sell.
“They’re getting a house at a rate that they never would be able to get, and they still are able to get equity out of it. It is still an investment for them,” DiGeronimo said in response to concerns that deed restricted properties may not be as attractive.
Domus is focused on southern Maine right now, but A Path Forward could have a broader reach. DiGeronimo, who’s running the program, is looking to function like a land bank and partner with any municipality with blighted housing stock it’s looking to transform. Machias is in talks for a project, but Boucher said it would likely be a one-off.
“Our current geographic footprint: southern, sort of western Maine and New Hampshire is probably where our sweet spot is right now,” he said.
