The nation's largest home builder is calculating exactly how tight the margins are to develop affordable housing in Seminole County.
Fort Worth-based D.R. Horton wants to build 40 single-family homes on a 9.5-acre lot in Sanford, at the southeast corner of Martin Luther King Jr. Boulevard and West 20th Street.
The property is zoned R-AH, the county's affordable housing designation. Under that zoning classification, all homes would have to be sold to low- and moderate-income buyers, with at least 40 percent of all dwelling units to be sold or rented at a price that is affordable to households of low income, according to the land development code.
"We're trying to see if it can work for us," Shaw Hutto, member D.R. Horton's land acquisitions division, told GrowthSpotter on Friday. "Our specialty is building homes for the first-time home buyer. There is a need for affordable housing, and we're exploring the market."
The need for affordable housing – also referred to as workforce housing – is acute in Orlando, which is tied for with Las Vegas as the worst cities in the nation for affordable housing according to the National Low Income Housing Coalition. A March report covered by the Orlando Sentinel shows there are 15 affordable rentals for everyone 100 low-income renters in Greater Orlando, and that real estate values in Orlando have increased six times more than wages in the last five years.
Despite the large market opportunity, workforce housing may not be a product segment builders like D.R. Horton can afford to enter.
The company has a new product line – Express – designed to be moderately priced, said Hutto. There are 27 Express communities in progress throughout Central Florida with prices as low as $148,000, but that won't meet the threshold for low income.
Housing classified as affordable can cost no more than 30 percent of a family's or individual's income. To meet Seminole County's requirement that 40 percent of an R-AH zoned property must be sold to low-income buyers, Hutto said mortgage payments would have to be less than $1,000 per month.
"That means you're looking at a mortgage of $100,000 or less," said Hutto. "That's going to be really tough to make the numbers work."
Hutto asked Seminole County planners last week about impact fee rebates, of which none were available.
"It seems like most of the programs are geared more towards rental rather than single-family," said Hutto. "We're not interested in multifamily development. We are a single-family home builder."
Hutto said if D.R. Horton could not meet the threshold for the R-AH zoning, the company would attempt to rezone the property or walk away completely.
"We like the property and hope to have success," he said. "We're trying to get a better understanding of what is available to us in terms of tax breaks or financing. The bottom line is this has to make financial sense."