San Jose low-income families get a shot at home ownership

Four low-income families in San Jose will soon be able to purchase a home of their own.

Habitat for Humanity has been renovating the historic Pallesen Apartments building, now located at the corner of Fourth and Reed streets, and will sell the condominiums to first-time buyers when the rehabilitation is complete in August. The 115-year-old building — comprised of four, 1,100 square-foot two-bedroom condos — will have a new foundation and roof, as well as new flooring, cabinets, bathrooms, appliances and more. The restoration costs about $2.6 million. Scape San Jose LLC, the previous owner, donated the building to Habitat for Humanity.

The homes are targeted for low-income families — households making up to 80% of the area median income or less than $159,550 for a family of four — and very low-income families making between 30% to 50% of the area median income, or less than $100,450 for a family of four.

The families will not be required to make a down payment. San Jose is providing $250,000 in down payment assistance, or $62,500 per condo, to lower the sales price of the homes through Measure E funds.

The condos are valued between $510,000 and $620,000, but families will pay a monthly mortgage rate of no more than 35% of their income. Monthly payments will be between $2,000 to $2,800, depending on income, and will be a fixed rate over 30 years. These payments include insurance and maintenance fees. If the family decides to move out before the home is paid off, the nonprofit will buy back the property and sell it to another low-income family.

The building has a deed restriction to remain affordable for the next 99 years, Ben Grubb, the nonprofit’s project manager, said.

“The idea is that housing can be a thing that you no longer have to worry about,” Grubb told San José Spotlight. “The difference between affordable home ownership versus affordable rental is that you’re not (just) changing the lives of two or three people. You’re changing the lives of 4, 10, 12, 24 people over the course of many years.”

Renovations were supposed to be complete by 2023, but delays in getting funding for construction pushed back the timeline, Grubb said. Santa Clara County provided $1 million in Measure A funds, a $950 million affordable housing bond approved by voters in 2016. The project also received loans from the Housing Trust Silicon Valley and Google.

The building, a Mission Revival-style fourplex built in 1910, was saved from demolition a few years ago when downtown residents and the Preservation Action Council of San Jose successfully raised $300,000 to move it to the corner of Fourth and Reed streets. The historic building was going to be knocked down to make way for a high-rise, mixed-use project in 2021.
Prior to the move, the building sat at 14 E. Reed Street for more than 100 years. It was home to Danish immigrants, who rented the rooms to local working class people. Although the house is on San Jose’s historic inventory list, it has to be part of the national registry to avoid being demolished.

“We’re trying to save neighborhoods,” Mike Sodergren, board president of the Preservation Action Council, told San José Spotlight. “We’re also trying to preserve architecture that reflects the cultural identity. When we do this, it preserves a unique sense of place.”

Contact Joyce Chu at [email protected] or @joyce_speaks on X.