Willow Bend housing project in south Fayetteville goes vertical

FAYETTEVILLE -- A housing development in the southern part of town started construction last month and is ready to welcome buyers after more than a decade of planning.

Willow Bend, an 80-home neighborhood, which will sit on about nine acres east of Washington Avenue, near Ninth Street, will be built over the next three or four years. Partners for Better Housing is the nonprofit organization overseeing the project.

About one-third of the homes will offer financing to people who make below 80% median family income for the Fayetteville-Springdale-Rogers metropolitan area. Median income for a family of four in Northwest Arkansas is $73,600, according to the U.S. Department of Housing and Urban Development. Eighty percent of that is $58,900.

The other two-thirds of the homes will be available to people making at or above median income through traditional financing options.

Even though all of the homes will be sold at market rate, those who qualify for the Pay it Forward plan will be eligible for $35,000 in down-payment assistance that will function as an interest-free loan. The assistance will lower monthly payments.

In turn, the buyer will agree to pay the $35,000 back upon resale or within 30 years. Partners for Better Housing will reserve the first right of refusal if a home is to be sold. Home-value appreciation will be capped at 2% annually to ensure affordability for the next buyer. The assistance will carry over to multiple iterations of homeowners.

Homebuyers who qualify for the program also will have to qualify for a traditional mortgage, said Tiffany Hudson, executive director of Partners for Better Housing. When a prospective buyer is told by the bank he can afford a home of a maximum certain dollar amount, the $35,000 toward the sale cost could put a Willow Bend home within his range, she said.

Hudson and other nonprofit board members will help people find additional forms of assistance, such as the Arkansas Development Finance Authority's home buying programs. Partners for Better Housing also has teamed with Credit Counseling of Arkansas to help prospective owners with debt payment and credit.

Helping people get to a point where they could buy a home at Willow Bend could take months for each individual case, but it will be a worthwhile effort, Hudson said.

"Even if you think, 'There's no way I can buy a house,' you might not be able to today, but what would happen if we worked with you for a year?" she said.

Options

Willow Bend will have four home plans available: two with two bedrooms and two with three bedrooms. Size will range from 1,088 square feet to 1,472 square feet. Prices will range $229,500 to $304,000. Four homes of each type are under construction with a completion date set for February or March. High Street Real Estate is managing home construction and sales.

Keaton Smith, Partners for Better Housing board member, said the price per square foot is indicative of the quality of the homes. A structural engineer was hired to oversee the foundations. The homes were all designed for energy efficiency. Fifty houses will sit on small lots with another 30 sharing courtyard space.

The idea was to build homes that will endure generations of homeowners with little maintenance required, Smith said. Partners for Better Housing will require every home to be owner-occupied.

"We hope for folks who have been looking for a high quality house in town, who don't necessarily have the money to do major renovations before they move in. Maybe this could be an option for those buyers," he said.

The type of financial assistance Willow Bend will offer certain residents is called a shared equity, home ownership program. Those types of programs have been around for decades and vary widely across the country, said Brett Theodos, senior fellow with the Urban Institute, a nonprofit research organization.

Shared equity programs are especially effective at helping people move from renting to first-time home ownership, Theodos said. The institute has done a number of studies looking at the programs' outcomes. Most programs are successful at getting the money up front to start a project and get the first round of homebuyers moved in, he said. The challenge is keeping the program going, he said.

There's a balance between having the first buyer accumulate wealth and keeping the home affordable for the next buyer, Theodos said.

"The programs can work," he said. "They can expand the opportunities for home ownership."

What's out there

Partners for Better Housing was formed as an off shoot of the Fayetteville Housing Authority in 2007. Two years later, the organization bought the nine acres with help from the authority. A grant from the Home Depot Foundation got the plan for a neighborhood in motion. The city invested $1 million in the project in 2016. Bank loans primarily have covered the $22 million estimated project cost.

The project has been a largely volunteer effort since the beginning, Smith said.

Designing and engineering a dense, compact neighborhood that worked on the site ended up being a challenge. The Pay it Forward program took years to develop. There was no other model to follow in Arkansas, he said.

"It just so happened to be a very complicated, ambitious project," Smith said.

Willow Bend's approach in blending families of different income levels is good public policy, said Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas.

There isn't much new construction in or near downtown, and what's out there is expensive, Jebaraj said.

The average selling price of a home in Washington County is $248,501, according to the most recent Skyline Report, which examined the real estate market in Northwest Arkansas for the first six months of this year. The price is an increase of 5% compared with the first half of 2019 and nearly 28% when compared to the same period five years ago.

New home building is up in the city, but it's mostly subdivisions far away from the center of town, Jebaraj said. What Partners for Housing is creating at Willow Bend is market rate for what it's building: quality housing close to amenities and public transportation, he said.

"They're doing that, and providing the same homes for a subsidy to people with lower than 80% the median income," Jebaraj said.