The East Baton Rouge Redevelopment Authority recently unveiled its master plan for Ardendale, formerly referred to as Smiley Heights, a new urban village development to include 850 residential units and 35,000 square feet of retail space. The development is designed to provide residential housing units affordable to families earning at least 80% of the area median income, which in 2013 in East Baton Rouge Parish, HUD reports, is equivalent to a single-person household income of $37,197, or $46,763 for a two-person household; $54,730 for a three-person household; and $68,921 for a four-person household. At 80% of AMI and a 28% Housing Expense Ratio, a four-person household would be able to afford monthly payments of principal, interest, taxes and insurance up to $1,286.53. Assuming a 20% down payment, standard underwriting terms, and average costs for taxes and insurance, that four-person household could afford to purchase a home valued at almost $250,000, which is above the average price planned for Ardendale. Certainly, many people will want to put down a lower down payment, which will decrease the amount of home they can afford, but the point is that the development seems to pencil out well for the target demographic being sought by the RDA. Add onto that the savings that residents will reap by living in a walking community that lessens the dependence on and cost of automobile transportation, and the affordability of the project is even better. This development will be a game changer for the community if the capital markets and mortgage industries do their part in keeping mortgages priced right.
(Brian Andrews is assistant director of the Real Estate Research Institute at LSU’s E. J. Ourso College of Business. His business is Andrews Commercial Real Estate Services, and he can be reached at brian.andrews@acresllc.com.)
