Below Market Housing: Buy Low, Sell Low

Would you believe that you can find a place in Palo Alto for under $100,000? Yes, it’s true. Under the Below Market Rate Program, a buyer purchased a 2 bedroom 1-1/2 bath residence for $98,800 back in April 2007. However, to be a qualified buyer, you must meet the Palo Alto Housing Corporation’s income and asset limits. So, what’s the catch?

With a deal this good, you have to join a long waiting list. Palo Alto Housing Corporation estimates a wait of 5 to 10 years or more for people currently seeking to join the wait list. If you are fortunate to be given the opportunity to purchase a residence under this program, well, there’s good news and bad news.

The good news is that if you finance with a 30-year fixed-rate mortgage, you can lock down your housing costs. You won’t be subject to changes in the general housing market, including interest rate fluctuations or annual increases in rent. The bad news is that unless you manage to dramatically improve your finances, you will not be moving out anytime soon. If you ever have to move, you do not benefit from the current market rate of housing in Palo Alto. Instead, you must sell to another Below Market Rate buyer at a price indexed to the Consumer Price Index (CPI). Buy low, sell low.

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