Admit it. You started looking at homes on Zillow or Trulia before you contacted your real estate agent. In fact, one of the reasons you contacted your agent was because you saw an unbelievable deal on a townhome in your ideal community listed for far less than what you think it should be worth. Are your eyes playing tricks on you? Is that really the price? Did Zillow or Trulia mess up the actual listing again? But wait, why has it been on the market for two months? A deal this good should have been snatched up within hours. You start thinking of all the horror that could await you in seeing this home: termites, missing floors, graffitied walls. Maybe you think it’s a short sale or foreclosure. But it’s not listed as such.
Then you talk to your agent. It’s an MPDU, or moderately priced dwelling unit. That sounds fantastic. Isn’t that what we’re all after? Then you learn that you don’t qualify to buy it. You make too much money. Can the county really do that? Yes. Is it in their best interest to turn away an ideal buyer? Not usually, but it is does help the population of Montgomery County who would otherwise not be able to afford a permanent home.
The program was started in 1973 as a way for lower-income families to find permanent housing at an affordable rate. The most recent comprehensive study was done in 2003 at the 30 year anniversary of the program. At that time, the MPDU program had developed and sold 11,000 units. No doubt in the years since that study, many more families have been effected positively by the program. As a rule, new home builders are required by law to make at least 12.5% of their homes MPDUs. That means they need to build them to be affordable to a population who wouldn’t otherwise be able to afford to buy in that particular neighborhood. All MPDUs are not priced the same, however. In a community with million dollar single family homes, an MPDU might go for $700,000, where in a community of townhomes listed for $250,000, an MPDU might be listed at $130,000. The price is relative to its community.
So what are the requirements for buying an MPDU? They are pretty standard to start out, though the longer the home sits on the market, some of the requirements may drop off. Firstly, buying an MPDU means that you either are a first-time home buyer or haven’t owned a home in the preceding five years. There are also income requirements. The minimum household income for anyone looking into the program is $35,000; and the maximum varies by household size. For example, a single person can’t make more than $52,500, while a family of four can’t make more than $75,000. There are also classes to attend, an application process, and approval from a mortgage lender. The longer the home sits on the market, however, the more relaxed the county gets on the requirements. Sometimes the income requirements drop off, sometimes the length of ownership drops off, or any other number of things. Since the county will take a hit on taxes the longer the property sits empty, the more urgent it becomes to sell.
Once approved to buy an MPDU, a buyer has a set of rules that must be followed regarding refinancing, selling, renting, purchasing another home, and others. Practically speaking, the county is a co-owner of the home with the buyer. They are on the deed just like the buyer is. The price of the home is more or less set in stone the day the papers are signed. No matter if you put in granite countertops or refinish the bathroom. Putting in hardwood floors won’t give a return on investment. If the buyer decides to sell the home, the price of the home can’t increase by more than what the county says is allowable, and half of the profit goes to the county.
This program isn’t for everyone, clearly. Perhaps it’s not what you’re looking for in homeownership or maybe you’re not the buyer the county is looking for to buy. But the program has done a lot of good for a lot of lower-income families.