The city of Medicine Hat is using a local builder who developed an innovative way to create affordable homes. The Canadian Funding Corporation reviews a report from the CMHC about Attainable Ownership housing in Alberta.
Alberta’s booming economy has brought benefits to municipalities. However, there’s a downside to the boom: escalating housing prices. Low- and moderate-income households face increasing rents, making it even more difficult to save for a down payment. In Medicine Hat, a growing city of about 57,000 in southeastern Alberta, a local builder developed an innovative way to create affordable homeownership. Classic Construction Limited, Medicine Hat’s largest builder, strongly believes in homeownership.This motivated Classic Construction to discuss with CMHC ways to develop affordable housing. The Affordable Housing Solution Classic Construction developed “Attainable Ownership Housing.” Attainable Ownership Housing builds housing for sale at below-market prices.
Marty Lapedus says that the program helps purchasers through direct down payment contributions and mortgage subsidies. Each purchaser receives a subsidy of approximately $5,000 to reduce the down payment, as well as a monthly subsidy for five or seven years to reduce mortgage costs, condominium fees and utilities. Classic Construction contributes about $18,000 per unit for the monthly subsidy.The subsidy gradually decreases over five to seven years. The Medicine Hat Community Housing Society provides homeowner training to potential buyers and administers the monthly mortgage subsidy. CMHC provides flexible mortgage loan insurance, such as allowing the builder’s down payment assistance to be considered as part of the required down payment; allowing the monthly subsidy to be considered as income, thereby reducing the income required to qualify for a mortgage and reducing monthly mortgage payments.
By mid-2007, three developments in Medicine Hat used the Attainable Ownership model. The City of Medicine Hat contributed by amending zoning requirements for density, greenspace and site coverage.
Northland Villas, a 94-unit project began construction in 2005 and is now fully occupied. In 2006, construction began on Northlands Pointe (219 units) and Somerset Villas (129 units). Classic Construction wanted the units to fit in with their neighbourhoods and the two and three-bedroom units include features, typical of high-end townhomes. All three developments quickly sold out, and demand for Attainable Ownership Housing is so high that Classic Construction has started a waiting list. In 2007, Classic Construction took Attainable Ownership to High River with 114 units and is looking to expand to other areas of the province.