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In an unexpected twist brought on by the nation's mortgage crisis, Habitat for Humanity of Charlotte has come to a startling conclusion.
Even with volunteer labor, it's cheaper to buy houses now than build them.
As a result, Charlotte's Habitat is among the first in the nation to start buying up houses in troubled neighborhoods where up to a third of the homes are vacant due to foreclosure. Average cost: $38,000 to $55,000, less than half the original price.
“We're getting them as low as $30,000, knowing we'll put in $10,000 of repairs,” said Meg Robertson, an associate director with Habitat. “To build a new one is over $60,000 … we're $20,000 to $30,000 cheaper per home.”
Best of all, Habitat expects to be reimbursed for most of the costs through a U.S. Department of Housing and Urban Development program that aims to stabilize subdivisions staggered by foreclosures.
The mortgage crisis has hit Charlotte worse than any other place in the Carolinas. The city had more than 8,000 foreclosures last year, and filings are up this year by 30 percent. Many involve newer starter-home communities in northwestern parts of the city, where houses less than five years old now are boarded up.
Such communities are where Habitat will focus its new Neighborhood Revitalization Initiative. This year, the agency expects 30 of its 77 projects to be foreclosures. The homes will be refurbished and sold to working families on a fixed income. The terms: zero down payment, zero interest and a sale price set on the buyer's ability to pay. Families must also contribute 250 hours of volunteer labor.
Absentee ownership and renting will not be permitted.
“This is not a permanent change for Habitat,” said Linda Blum, the agency's development director. “It's just trying to take advantage of market conditions to be good stewards of the donors' dollars.
“We're not evicting anyone. We don't want it to get out that we're throwing people on the street. These homes are vacant.”
Habitat already has bought five homes from the Windy Ridge, Grass Meadows and Barrington subdivisions – among the 11 troubled neighborhoods that qualify. HUD is expected to give Charlotte about $5.4 million over the next 18 months. It will be shared by a partnership that includes Charlotte's Habitat, Charlotte-Mecklenburg Housing Partnership, Self-Help CDC and Charlotte Housing Authority. All have agreed to purchase vacant houses for resale.
In all, the partnership expects to buy, refurbish and be reimbursed for 110 vacant homes.
“This is a big deal for homeowners in these neighborhoods,” said Stan Wilson, the city's housing services manager. “You've invested all your money in a home, and you've seen all these foreclosures around you. You see your value gone and your neighbors gone.
“This is a great opportunity for us to bring that value back and make the neighborhood what it used to be.”
Habitat expects to spend $1.5 million this year buying foreclosed homes, with the help of a fall fund drive its leaders hope will raise $500,000. The first $50,000 is in hand, via an anonymous donation.
Meg Robertson of Habitat admits she was hesitant at first about buying homes because it's so far from the agency's long-standing model. Since 1983, Charlotte's Habitat has built 857 homes for low-income working families, using volunteer labor.
Volunteers will still be needed to help refurbish the foreclosed homes, but the jobs will be smaller and more specialized, including landscaping and installation of heat and air.
“When you tell volunteers you don't need them, it's tough to get them back,” Robertson said. “But at the same time, our mission is to serve as many families as possible in the most cost effective way possible. Money has been tight for us.”
So tight that Habitat built 18 fewer homes than expected over the last 12 months. The agency will build five fewer houses this year – just 47 – making the foreclosed homes all the more essential. It currently has more than 100 families on its waiting list.
The first of the refurbished foreclosures will be sold this fall to a family that has done volunteer work and completed counseling programs on homeownership. Money paid for the homes will be reinvested in Habitat's programs.
“It doesn't bode well for a neighborhood with 20 vacant houses,” said Merritt Card, Habitat's land-acquisition manager. “The people in those areas want occupancy and permanency, not absentee landlords. ... With this program, we're providing stability.”
