Kerry Jefferson, a 35-year old Realtor and new mother in Flint, Mich., knew she was taking a gamble.

In 2014, ​she​ and her husband, a manager at McDonald’s, ​scraped together enough cash to buy a once-derelict single family home on​the tree-lined block of Branch Road on the east side of the city. The $15,000 might not have been enough for a down payment elsewhere, but it was enough to buy the ​white-painted ​home ​with a wraparound porch outright​in Flint.

With the help of her brother, a contractor, she put ​more than ​$7,000 worth of remodeling work into the home, with new cabinets​ and paint, new copper pipes and a new kitchen. In October, she listed the home for $48,000, hoping to parlay the proceeds into a down payment on her $125,000 dream home by a lake in Burton, Mich., south of Flint.

But ​late last year, the news about the lead poisoning broke. Listing prices in Flint dropped about $6,000 on average, or about 10% a week after the news broke, according to Trulia.com.

“We were doing pretty well showing the house with two or three potential buyers a week,” Jefferson said. “Now, nothing.”

Jefferson wasn’t alone. Jeremy Bigelow, a ​Realtor for Keller Williams in Clarkston, Mich., about 30 miles southeast of Flint, said he lost a sale when an investor backed out. “He told me he couldn’t do anything right now because of the water issue,” Bigelow said.

The Flint real-estate market had long been depressed after the loss of jobs in the nearby auto industry. Flint had been the heart of General Motors auto manufacturing for decades, building tanks and aircraft engines that helped win World War II, but employment by GM and its affiliates had dropped to about 7,000 by 2008, down from 83,000 in the 1950s. About 41% of the city’s 100,000 residents live below the federal poverty line.

Median home sales prices in Flint had risen from a 10-year low in April 2014 to $46,700 in August of last year. But the water poisoning crisis at the end of December dropped selling prices to $30,700, according to Zillow.com.

“This is a momentum killer, I’m not going to hide it,” said Chris Theodoroff, the Flint Area Association of Realtors president. “Everybody’s is now going to have to get a water test to sell,” he said. ​

The Environmental Protection Agency says that lead levels of 15 ppb (parts per billion) is considered unsafe, and some homes in Flint still have lead levels 10 times higher than what the EPA considers dangerous. ​

Jefferson, a longtime Genesee County resident, like many others in her community, was well aware there were issues with the Flint River. “We were told not to eat the fish out of the river, because we knew General Motors had been dumping toxins in there for years,” she said. ​

Elevated levels of lead in water have been shown to delay physical and mental development in infants and toddlers by causing damage to the brain, red blood cells and kidneys. The effects of lead poisoning, which often manifest as lower IQ scores and antisocial behavior, are often permanent.

After buying the home​in walking distance of the Flint River​ in 2014, ​Jefferson started to worry that the problems were more severe than she had believed. At first, she could tell the water had a bad chlorine taste, especially in the morning or late at night.

“It smelled awful,” she said. Later she discovered that whenever she gave her now-toddler son​ Charlie​ a bath, there was a dirty orange ring around the tub.

“I always had to scrape it off afterwards,” she said. “And we’ve been showering in this water for months, too, and my son was even blowing bubbles in the water. ”​

The Centers for Disease Control and Prevention say bathing in water with elevated lead levels, even for children, is still safe as human skin cannot absorb lead.

Hearings open on Flint water crisis

Jefferson now goes to the city fire station​ several times a week to exchange empty plastic bottles for cases of safe drinking water. She’s one of the lucky ones because she has a car. Shut-ins or those dependent on public transportation have to call 211 and wait for the Michigan National Guard to deliver water to them. Sometimes Jefferson will pick up water for a homebound neighbor who is stricken with cancer.

Bottled water is fine for drinking, but she says city residents need larger quantities for dish washing and bathing, and while grocery stores like Kroger and Meijer have dropped prices on cases of bottled water to as little as $1.99, there often isn’t any left to buy.

Last week, the city of Flint ordered residents to boil their water to destroy bacteria that might have gotten into the system after a large-diameter main burst. But boiling water that has lead in it can actually make the poisoning worse by vaporizing the lead so it can be ingested by breathing. The boil water notice was lifted this week.

And to add insult to injury, Jefferson paid just $125 every quarter​ (or about $42 a month) ​ for water when she lived in Burton, which came from Detroit’s water system, which is considered safe. When she moved to Flint, her water bill rose to about $125 a month for water that was contaminated.

She’s refused to pay her water bill, and while the city has offered her a credit for the past two months, she hasn’t been reimbursed for the nearly $2,000 she spent on a water filtration system.

Property insurance policies won’t cover the damage either, according to Jeff Brewer, a spokesman for the Property and Casualty Insurance Association of America, a Chicago-based trade group. “It’s an unfortunate situation, but they would not be covered,” he said.

“The impact on homeowners is far-reaching,” said Aracely Panameno, Latino Affairs Director at the Center for Responsible Lending. “In the absence of comprehensive infrastructure improvements, they face significant losses in property value without any prospect of recovery.”

Panameno’s group is calling for the city and state to halt property tax collections on affected homeowners and for lenders to give homeowners a credit so they can use those funds to pay for water filter systems and replacement of pipes.

Flint Mayor Karen Weaver said ​earlier this month it will take​ $55 million to replace​ about 15,000 lead pipes within the city limits in the space of a year, but it will require the approval of the Michigan legislature and the governor, Rick Snyder, who earlier this month apologized to city residents for his administration’s role in the decision to switch water supplies and ignoring warnings about elevated lead levels in the Flint River. ​Snyder committed $25 million to replacing pipes in Flint. ​

For homeowners, however, an even bigger headache emerged earlier this month as potential home buyers and sellers in Flint have also been smacked by ​a requirement by the​ government’s biggest backers of mortgages, Fannie Mae and Freddie Mac, that lenders must certify​ through the appraisal process​that the home’s ​water is safe before ​the agencies insure ​a loan made on the property. Private lenders followed suit as a result.

“What’s happening is that financial institutions are just not lending,” said Keller Williams’s Bigelow.

Fannie Mae spokesman Andrew Wilson said it’s not true that lending has been halted in Flint, but that it will take more effort on the part of borrowers, lenders, and appraisers to ensure the water supply is safe to drink so that loans will qualify under existing federal standards for water potability.

Fannie Mae “is willing to purchase loans made in Flint, [but] there may be additional work involved,” Wilson said in an interview.

He also noted that under Fannie Mae’s disaster relief servicing provisions guidelines, lenders could suspend or reduce mortgage payments to help ​borrowers pay for filtration systems, or otherwise create a loan modification to help homeowners if their home’s value or livability is impacted by the lead poisoning.

The Mortgage Bankers Association, a D.C.-based trade group, said it’s trying to get mortgage lending restarted.

“The difficult issues raised in Flint go beyond just Fannie and Freddie, but essentially they revolve around the balance between protecting the health of borrowers without decimating home values in an area that is already facing serious struggles,” said David Stevens, president of the MBA. “There’s not an easy situation for anyone, but the entire lending community is engaged in trying to find a solution.”

Jefferson said she dropped the price of the home by $2,000 to $38,000, but there were still no takers. She doesn’t want to go lower, either. ​ She also just got back her latest lead levels result, which show elevated levels of lead and copper that could hurt her further efforts to sell. ​

“I’m just going to keep it on the market until somebody buys it, whenever that is,” she said. ​