Housing prices test teachers

After teaching for eight years in San Jose, Calif., Seena Hawley was ready to pack up her things and move to southern Oregon where the cost of living is more reasonable. The fifth-grade teacher thought she'd never be able to afford a place of her own in the heart of Silicon Valley, where the median price for a home is $512,000.

But then she paused. Interest rates dropped and her salary went up slightly. She also remembered those fliers stuffed in her box at school - the ones about a special home-buying program for teachers.

"I could have bought some rathole, but I didn't want a rathole for $280,000," says Hawley with a laugh.

There were other factors involved, too. If she was going to buy, Hawley wanted to stay in the same school district where her son is attending high school. She also wanted to ride her bike to work and participate in Saturday school activities.

So Hawley, who had rented a house for 13 years, sat down with a mortgage broker. With a deferred loan assistance of $40,000 from the San Jose Teacher Homebuyer Program, she bought a condominium for $340,000 earlier this year. Hawley doesn't pay anything on the $40,000 until she sells her condo. "The program is saying, 'It's hard to live here on a teacher's paycheck and we want teachers. So, we'll help you live here,' " says Hawley, a single mother of two.

Skyrocketing real estate coupled with stagnant teacher salaries - which increased only 3 percent between 1991 and 2001 - are pricing some teachers out of their school districts.

These teachers, both new and in the middle of their careers, are forced to switch districts or endure lengthy commutes. School officials in these pricey areas hope that homebuyer programs will help to attract new teachers and retain those already on staff.

"Very often, teachers will live in other communities or double up and have roommates; that's not un-usual for young teachers," says Mildred Hudson, CEO of Recruiting New Teachers, a clearinghouse for prospective teachers, in Belmont, Mass.

"If you look at the country, certain school districts will offer housing incentives or bonuses, extra pay for certain kinds of work, or discounted mortgage rates, or cash stipends for housing. These are all incentives that seem to have some benefit."

Still, housing programs and incentives aren't without their flaws, says Hudson.

Some provide just a temporary Band-Aid. A few years back, Massachusetts offered $20,000 bonuses to attract teachers, payable over several years - only to see many of those teachers leave their jobs as soon as possible.

"They didn't have a good screening process" to identify those teachers who would stay beyond the initial required time period, says Hudson.

Elsewhere, HUD's Officer Next Door and Teacher Next Door programs were suspended in 2001 for three months due to poor management control and homebuyer fraud. And even though San Jose's home-buyer program helped Hawley buy her own place, she still had to tap other resources to fork over a down payment.

But there are some bright spots. If it wasn't for the San Jose Housing program, superintendent Barry Groves would have lost his award-winning band director.

"She probably would have left in order to purchase a home in the central valley, had this program not been available to her," says Mr. Groves, superintendent of the Cambrian School District in San Jose. "People are able to stay in this area and get into the housing market that wouldn't have before. This has made the retention of those teachers possible."

But Groves says there are still a few who commute from far distances, including a teacher who travels about 85 miles each way.

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