Economic hurdles call for changes to Arbor Estates agreement

Economic conditions have slowed lot sales of the Arbor Estates subdivision in Newton, which prompted city council members on Oct. 24 to amend their real estate development agreement with Newton Housing Development Corporation that allows lot prices to be paid at the time a new home is finished and sold.

NHDC entered into a real estate development agreement with the city in March 2018. The purpose of the agreement was the finance the purchase of a 70-acre parcel of land in northeast Newton, now known as Arbor Estates. The agreement also ensured the future development of the land and sale of residential lots.

However, the city has found in recent conversations with potential builders and developers — who previously expressed interest in spec home construction in Arbor Estates — that the market and economic conditions have slowed any further development. The city felt it was necessary to amend the agreement.

Bruce Showalter, executive director of NHDC, agrees with the change. In a presentation to council members at the same meeting late last month, the impact of the economic conditions could be seen in the number of new home building permits in the past year, which was the lowest it has been in about 10 years.

According to Showalter’s presentation, there were only two new home building permits issued in 2022, a stark contrast to the progress NHDC was seeing. NHDC’s goal is to increase the quantity and quality of housing in Newton, and the organization does that by partnering with the city and other stakeholders.

In 2011 there were no new single-family housing construction permits in Newton. The next few years the city did see single-digit increases in new housing units.

Establishing the housing incentives program in 2014 — which offered new homebuyers $10,000 — boosted those yearly single-family housing units to double digits from 2016 to 2021. In less than 10 years, Newton saw a total of 105 new housing units since the incentives were put in place.

Housing in Newton was at its strongest from 2017 to 2019. In total, 57 new home building permits were issued in that three-year timeframe. The pandemic slowed the volume of homes built only briefly with 11 new building permits issued in 2020, and then 14 permits in 2021. This past year has been a challenge.

In order to overcome the economic hurdle and encourage spec home development, the city amended the development agreement with NHDC to allow for subordination of lots sold to builders. NHDC shall reimburse the city for each subordinated lot within 30 days of the closing date.