The Pathway Forward: Affordable Housing in the Midsts of COVID-19

There is nothing quite like watching a first-time Habitat homebuyer cut a brightly-colored ribbon from the doorway of their new home. The smile on a homebuyer’s face as they step into a new chapter of their lives, leaving a lasting legacy on their children and grandchildren, is contagious. The relief in knowing they have a safe place to call their own and to retreat to after a hard-days’ work is resounding.

The restored hope that comes when a homebuyer knows they will no longer need to make impossible decisions between paying high rent, putting nutritious food on the table, saving for health care or investing in their children’s education, is life changing. This is not just the power of our work at Habitat for Humanity of the Chesapeake, but the power of housing affordability.

Habitat for Humanity of the Chesapeake is one of 1,200 Habitat for Humanity affiliates around the country. Working independently, we extend the dream of homeownership to low-to-moderate income families who struggle to find stable, affordable housing in a region with an increasingly high cost of living.

As partners in our program, applicants dedicate 250-350 “sweat equity” hours through homebuyer education, homebuilding and working in our ReStores. We also work with applicants on helping create budgets they can stick to, and to make more informed financial decisions by exploring their spending habits and assisting in the mental transition from being a renter to a homeowner, a key element of the program.

Since 1982, Habitat Chesapeake has built and renovated more than 770 homes in Baltimore City and Anne Arundel, Baltimore and Howard counties. While new construction is most cost-efficient, we feel a strong commitment to rehabilitating vacant properties given the blight facing so many communities, particularly in Baltimore City. In either scenario, our model asserts a feasible payment for hardworking individuals and families earning 30 – 80 percent of the Area Median Income (AMI).

The Difficulties 

Behind the scenes at Habitat Chesapeake, away from the ground breakings and ribbon cuttings, are a group of dedicated staff and board members examining data, reviewing neighborhood opportunities, and calculating the cost of breaking ground and rehabilitating vacant structures throughout the City.

The truth is, as a builder, affordable housing is expensive. Many times, the physical cost of rehabilitating a home outweighs its appraisal value, a hard truth many small developers within Baltimore, and across the country, face.  Simply put, how is it possible to sell a home that will cost more to build or renovate than its actual appraised value? Add the need to keep homes affordable for hardworking individuals and families earning 30 – 80% AMI and a culmination of difficulties arise keeping even the most well-intentioned from meeting a dire need.

As a lender, Habitat also faces a distinct set of challenges. While Habitat’s financial criteria for becoming a partner family and eventually securing a mortgage through our homeownership program is still similar to that of conventional mortgage products, it offers room for those buyers within the 30-80% AMI range to access a unique set tools to set them up for success.

First and foremost, Habitat Chesapeake aligns program participants with homes that match their unique affordability — ensuring that their initial monthly housing expense as a homeowner does not exceed 30% of their gross income. Additionally, where many individuals and families struggle to come up with a larger lump sum down payment, Habitat Chesapeake offers the ability for all program participants to come up with a flat $2500 deposit.

Habitat’s program staff members work with partner families to approach savings goals and a deposit schedule that is flexible over their roughly 12-month journey within the program, so that the path to homeownership does not come as a burden, but as an opportunity. Furthermore, staff assist throughout the loan application process, including utilization of local down payment and closing cost assistance programs, all of which are an important element in keeping the homeownership process affordable.

Program participants also participate in homebuyer education classes throughout their time in the program that touch on everything from budgeting and spending habits to home maintenance and income-based tax credits that will benefit them as homeowners, creating well-rounded and informed residents.

Of course, there is more than one culprit to the lack of affordable housing or the difficulties we face in bringing it to fruition. High demand, rising rents that supersede a renter’s income, low wages, and high cost of living all compound the housing issue we face. In fact, the scale of this problem is far too large for any one organization or developer to address on their own. Unemployment rates are rising, health for many Americans is on the decline, and food shortages are upon us. One thing is certain, however: the need for a safe, affordable place to call home is more important than ever.

A Balancing Act

The case for affordable housing is a balancing act to say the least. Experts generally say that the maximum a family should pay for housing is thirty-percent of their income. Any more than thirty-percent, and a family is considered cost-burdened, which means they often find themselves making tough choices when it comes to other needs.

We have seen firsthand the relief that comes from reducing a family’s monthly housing costs by becoming Habitat homeowners. The feeling of being riddled with anxiety because their monthly rent commanded almost all of their monthly income is lifted from their shoulders.

Oftentimes, these new savings are invested in other critical areas, such as afterschool programs for kids, more fresh food, and the establishment of an emergency savings fund. However, even with Habitat Chesapeake and dozens of partner organizations working day-in and day-out to put more families into affordable homes and apartments, an additional more than 14,000 units are needed in Baltimore City alone, to ensure that no family is housing cost burdened.

As families’ lives are transformed, so too are the communities where these homes are established. Affordable homeownership brings about visible investment, engaged long-term residents, opportunities for workforce training, and new tax credit revenue to support public services and infrastructure. Communities like North Baltimore’s Woodbourne-McCabe, where we have completed twenty homes and are presently continuing work.

Ten years ago more than half of the three blocks we’ve concentrated work on was vacant. Since work began, residents have taken initiative to improve green spaces, and continue building upon relationships with elected representatives and local organizations. The community was also featured as a “Neighborhood on the Rise” by Live Baltimore, with home sale prices increasing four-fold from 2015 to 2017 (Baltimore Sun, 2017).

Baltimore and communities across the country can thrive when there is a presence of decent, safe housing. But with over twenty percent of all households annually spending more than half of their income on housing and an estimated 3,000 homeless individuals in Baltimore alone, housing stability is a major regional issue. When coupled with the effects of the COVID-19 pandemic, including the loss of income and employment, the need for housing affordability has never been more prominent. COVID-19 only amplifies this need, a need not easily met.

Purposeful Partnerships

Never has it been more necessary for developers to join together to address the unrelenting need of housing affordability.

At Habitat, the need is great. In the face of COVID-19, interest in our affordable housing program has not slowed. Every day our team receives application after application from Maryland residents seeking to qualify for an affordable home. What we need most to meet these needs are purposeful partnerships with builders, contractors, developers, investors and representatives on the local, state, and national levels to help us build homes, communities and hope.

Partnerships that will enable us to continue investing in areas of great need like Sandtown-Winchester, where we have built more than 300 homes over 30 years.

Such partnerships will spearhead our goal of bringing stable, self-reliant homeowners to the 1300-1500 blocks of Fulton Avenue, a part of our 2025 strategic plan. However, to do so requires a cohesive vision, parts of a whole work fitted together with residents, community organizations, local and state government, to help bring stabilization to the community through homeownership.

In an ideal model, we envision working alongside fellow small developers in specific neighborhoods, maximizing the revitalization and housing market improvement in each.  Building side by side would create capacity and enliven the housing market, particularly with a strategic mix of affordable homeownership, and rentals with landlords who are community-conscious.

Our individual talents and models could help increase capacity for each of us, and for the overall effort: smart strategy and support of mutually beneficial efforts within communities feels like to right next step, especially as we navigate through, and out of, this pandemic.

Likewise, the support of corporations, faith institutions, schools, and individuals across Central Maryland also keep us hammering on. As a result 2,700 children and their family members have a safe place to retreat to in a time where we are called to stay home.

For almost forty years, Habitat for Humanity of the Chesapeake has been working to build safe, decent and affordable homes for low-income homebuyers.  In the process, we engage businesses, faith organizations, schools and community organizations in construction and financial support. It makes Habitat especially oriented toward working in partnership. In the years ahead, Habitat is eager to leverage our organizational strength by aligning more actively with small, conscientious developers in complementary efforts that increase impact and open the door for greater access to affordable homeowners and effective neighborhood redevelopment.