Townhome Prices Rising Out of Reach

Montgomery Report Warns Middle Class

Even older townhouses becoming unattainable to middle class residents. (Timothy Jacobsen)

Montgomery County officials have learned that the affordable-housing dilemma might be even worse than they thought.

As property values across the region soar far beyond growth in personal income, townhouses -- especially older ones -- have been a last chance for people of moderate means to enter the county's housing market. Soon, however, even many of those will be beyond the reach of the middle class in Montgomery, according to a county report released last week.

Researchers at the Maryland-National Capital Park and Planning Commission predict that within two years, the county's median annual household income -- now $84,000 -- will not be enough to support the purchase of at least half the previously occupied townhouses on the market.

At that threshold, county officials will consider -- at least for planning purposes -- existing townhouses unaffordable for the typical family. Those units, referred to as attached dwellings, last year had a median sales price of $274,000 in Montgomery.

New and existing detached single-family houses and new townhouses, all of which had a median sales price of more than $400,000 last year, already are considered too expensive for a family that makes a median salary.

Some middle-income families will continue to be able to find townhouses, and even single-family homes, within their price range. But the trend forecast by planners suggests that increasing numbers of buyers will be forced to look beyond Montgomery; will turn to risky financing plans, such as interest-only mortgages; or will assume mortgages that exceed the traditional affordability yardstick of three times an annual income.

"This is why affordable housing has got to be on anyone's short list of major challenges to Montgomery County's future," said Derick Berlage, chairman of the county's planning board. "The situation is actually even worse than these numbers suggest. . . . If they continue, the demographics of the county will fundamentally change because people with ordinary incomes -- firefighters, police officers, nurses -- simply will not be able to live in the county."

Francisco Javier, 25, said the news doesn't surprise him.

Javier, a Montgomery firefighter, said he has been trying to buy a townhouse or condominium in the county for the past two years but has concluded he cannot afford either on his $45,000 income.

Moreover, Javier said he can no longer afford the $1,850 monthly rent for his two-bedroom Rockville apartment. And buying a single-family home in Montgomery is impossible, he said.

"The bottom line is, even condos in Montgomery County are well over $200,000," Javier said. "It's kind of ridiculous. . . . We can work here in the fire department. We just can't live here."

Javier's housing experience is reflected in the numbers of the new county study, which examines what type of dwelling Montgomery's middle class can afford and still have enough money for food, clothing, transportation and other essentials.

Using a computer-generated program called the Affordability Index, researchers matched the county's median household income against median sales prices last year for different types of houses. After factoring in mortgage rates and estimated annual property tax payments, the program determines what a typical family can afford while spending no more than 28 percent of its take-home pay on housing.

This year, someone making at least $76,600 can afford to purchase a typical existing townhouse, meaning a majority of those units remain affordable to someone making the county's median income.