Editor’s Note: This is the final part of a three-part series on local innovations focused on affordability and community development. Read the first part here and second part here.
A lot of times in the housing industry, people get caught looking up. Expecting the next big thing or the solution to longstanding problems to come from a national think tank, a large conglomerate or an established thought leader is not a mistake – to Many world-changing ideas of course come from these spheres. At the same time, it’s easy to miss out on spectacularly innovative new ideas or approaches simply because they come from elsewhere – from small markets, from abroad and from different disciplines.
As the entire industry reels under the weight of a long crisis of affordability and lack of inventory, it is possible that real estate will come back on its way thanks to methods and approaches already practiced. It’s also possible that, in the upper echelons of the C-suite, experienced executives and academics will concoct the eventual solutions that will solve longer-term problems in real estate like the homeownership racial gap, pessimism around affordability, new entry-level home construction and gentrification.
But it’s also possible that these ideas will germinate locally, driven by innovators who have found new ways of looking at housing without the burdens of convention and preconceptions, drawing on resources or expertise not endemic to industry thinking. Given the state of local real estate, it seems even more likely that big changes will develop bottom-up rather than top-down.
Almost always starting small, these ideas have the chance to grow and spark real and fundamental change in the way we think about housing:
Redeem (and lease) the block
Bonita Harrison is a broker who lives and works in the West Woodlawn neighborhood of South Chicago. Like so many others who come from close-knit communities, Harrison says she always cared deeply about the neighborhood she grew up in, always populated with friends, neighbors and family, and worked hard to reinvest in it.
With the difficulty of finding affordable housing and with the undervaluation of black neighborhoods after decades of prejudice and redlining, the challenge of finding ways to create new housing that is accessible to residents of this neighborhood is never easy. In this case, it took banding together with four other like-minded black real estate professionals from the area to find an innovative path to home ownership.
“When we talk about creating wealth for the black community, what does that look like?” she asks. “We want to make sure we can retain as many people as possible and make sure their capital position can grow.”
Harrison and the other developers – all experienced brokers with their own businesses, but working in tandem – came up with a specific way of creating housing to serve residents. Acquiring a dozen derelict properties from the local land bank, they designed a three-unit structure that would have similar design elements, all remodeled and assembled by local black craftsmen.
The idea, says Harrison, is that a neighborhood resident will be able to qualify for a mortgage using the additional rental income from the other two units, competing with the “gentrified population” who often quickly grab housing and make drive up rents and prices. These new buildings will also add two more quality rental units to the neighborhood, with an owner residing in the same building who (ideally) knows them and understands their needs.
“The government will come and demolish the houses you have, blocks and blocks of vacant land and rundown housing,” she says. “What we’re trying to do is fill those vacant lots with properties so that more of the community can move in…and that increases the market value of those properties and brings equity into our community.”
Although this approach – buying a property using rental income from another unit – is not a new idea. But having developers who are natural competitors coming together and working hard to keep all the money in their community is unique, according to Harrison. It’s especially notable in an area like Woodlawn that is still steeped in poverty and neglect, she adds, where morale is low and other developers aren’t investing.
“When you’re from the community like us, you see the needs,” she says.
Before Harrison’s group came together, another more established group had successfully rehabilitated and sold homes to residents of Woodlawn. Bill Eager, vice president of real estate development for the national non-profit organization Preservation of Affordable Housing (POAH), led a major campaign that saw 44 homes in Woodlawn renovated and sold at affordable prices, when the market was “softer” than it is now.
POAH’s efforts, which are likely to be revived in some capacity later this year, Eager says, have used a mix of local, federal and state grants to fix distressed properties and sell them to residents. They depended on word of mouth and local community groups to get the word out. POAH has also been able to offer down payment assistance, although with rising house prices, Eager says a relaunch of the program is going to be difficult.
“The biggest hurdle right now is just the cost of development,” he said. “And the construction costs are so high that it’s really hard to bring things up to a level affordable for a low-income household.”
POAH considered $15,000 to $50,000 for closing costs and down payment assistance, but Eager admitted that might not be enough in today’s housing market.
“I’m not sure how big the $15,000 aid is right now, but that’s kind of the range we thought about,” he says.
Eager says he’s aware of the “buy the block” effort from Harrison and the other developers, applauding it even though POAH isn’t officially involved at this point. This project came to fruition almost spontaneously, with Harrison claiming that she only knew the other developers informally before this recent collaboration.
“We saw each other at Home Depot, we saw each other on the way,” she recalls.
An initial conversation helped them all understand the impact they individually had on the region, Harrison adds, and after that the need to work together seemed obvious.
“If we focus our impact, it would make more sense…we’ve made it cohesive, we’re going to go out and spread,” Harrison says.
She describes how powerful this effort is to change the trajectory of a neighborhood, increase property values at all levels, and truly change the attitude, perception and habits of the people who live and work there. Designing buildings with a similar aesthetic and strategically placing them can quickly accelerate the kind of positive change developers hope to create, she says.
In fact, Harrison says other developers have approached her since the project was announced, and there’s a “Phase 2” underway that includes the nearby commercial corridor – something that will become very important as that more and more people will become mobile in the region. She says they have also been in contact with local government officials, with the most urgent need being “affordable capital” to expand the effort.
“We’re okay with doing it ourselves, but give us access to capital that we can use, that makes sense for the project,” Harrison asks.
But it’s really that sense of community, Harrison points out, that makes this project both unique and feasible – something she hopes will be replicated in other parts of the country by people who understand that cooperation and understanding can really make a difference to a neighborhood.
“We go through our network and say, ‘Hey, let’s do this ourselves,'” she says. “We really want to be able to do it ourselves, just because of what it means to us and what it means to the culture and the community.”
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