If you are buying a newer home in eastern King County (Bellevue, Redmond, Kirkland, Issaquah, Woodinville and unincorporated King County), you may occasionally encounter a home that is part of the ARCH Program. ARCH stands for A Regional Coalition for Housing which is a program to increase the supply of housing for low and moderate-income households. The homes do come with a set of restrictions that a home buyer must be aware of.
Homes in the ARCH program can be condos, townhomes or single family homes, though many are condos. It is not unusual to find a batch of ARCH homes mixed in with other non-ARCH developments as well.
Buying a home in the ARCH program does offer an affordable price and can be advantageous for lower-income home buyers in these pricey Seattle suburbs. However, there is a strict set of rules on how the home can be sold. Those rules last from 15-50 years from the date of the original sale and may not be changed. Most resale covenants last 30 years from the date of the original sale. Here are some of the key restrictions:
- Homes must be owner occupied. You cannot rent out the home, though occasionally a short-term rental is allowed if you can prove a hardship.
- Future resale prices are fixed by a formula, they do NOT change based on market competition and neighboring sales. The homes are re-priced each year based on changes in an index like the CPI (Consumer Price Index) or other indices. The may not sell for more than the amount calculated by this formula, though it could sell for less if market prices have declined.
- During the first 60-90 days of trying to sell an ARCH home, you may only sell to individuals who meet the appropriate income guidelines. After the initial period has passed without a sale, you may sell the home to anyone. The maximum sale price remains fixed and the transaction must still be approved by the County.
Each community comes with a detailed Resale Covenant that outlines the exact rules in place for a particular set of homes. A buyer must read and understand everything in this document. The restrictions on maximum sale price are quite significant in periods of appreciating prices, though the lower purchase prices may outweigh that downside for buyers with moderate income looking to secure housing.
The ARCH website is a great resource to learn more about the program and be sure to work with a real estate agent who is familiar with the program if you are looking to buy one.