Resale Formula Example

A 3-bedroom home in the Salal Neighborhood recently sold for $136,000. (The same home was appraised at $263,000.) Let’s say the owner decides to sell in 10 years. Our formula says that the resale price will be EITHER 25% of the increase in appraised value, OR the percent increase in area median income (AMI), WHICHEVER IS LOWER.

Since home prices have been increasing much faster than area median income, it is likely that this index (AMI) will determine the price. Assuming that area median income rises by 10% in ten years, the new sale price would be the original purchase price plus 10% of the original purchase price or $149,600 ($136,000 + $13,600.) Therefore, it is still affordable to those in the same income category.

Using the appraised value example, if in ten years the appraised value of the home rose by $100,000, to $363,000, the new sale price would be 25% of the increase, or $136,000 + $25,000 = $161,000.

In both examples, the homebuyer is entitled to all the proceeds (minus outstanding mortgage loans.)

ONLY by restricting the resale price in this way, can the home can be kept affordable to those earning island wages, FOREVER!