Bmr/affordable Housing "value"

[Andrei Fin]

I am appraising a below market rate home. The client wants two values.

The first is under the hypothetical condition that there is no BMR deed restriction. No problem.

The second is market value with the deed restriction. Apparently the program is HUD and sets an upper limit on price based on a formula that includes area median income, current interest rate, people in household, and number of bedrooms. The price is subject to market forces in that it can be negotiated below the maximum, but it cannot go above the maximum. The homes are currently selling below the maximum.

I am wondering if I need to change the definition of value for the second analysis, and if so, what would you write?

 

[Meandering]

I am wondering if I need to change the definition of value for the second analysis, and if so, what would you write?

Describe the two value opinions, based on the two markets.

one is the wider market for anyone wanting to buy a house in the neighborhood.

the other is a very restricted market, limited to buyers approved by HUD, and that, this market has a sales price cap, dictated by HUD. But it is still an "open" market, because HUD can't force anyone to buy and is not forcing the price, just limiting the buyers and capping the price.

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