In some places, it just doesn’t make sense for Habitat for Humanity to build new homes anymore. Those markets include Southwest Florida, where a foreclosure can be bought and rehabbed for less than the cost to build a new house. Or Toledo, Ohio, where the population growth has stalled and there already exists ample homes available for renovation and rehabilitation.
So, in these markets and others, Habitat has all but stopped new construction and started buying foreclosures or rehabilitating existing homes instead. It’s part of a refocusing of the international nonprofit to better tailor its services to the needs of its markets.
Mark Andrews, senior director of U.S. operations for Habitat for Humanity International, said the move doesn’t signal a change in Habitat's business model. “We have always done remodeling work,” he said. Instead, it represents a shift toward a more holistic assessment of needs for the communities the organization seeks to serve.
“I think our 1,580 affiliates in the past have thought that new house construction was the only avenue we had,” said Andrews. “We really want to remind them that this is who we have been all along: community builders. There has always been a development aspect for what we do, but now the communities are under such increased pressure that we can broaden the scope of our involvement.”
That means not simply than building a brand new Habitat house on whatever lot the nonprofit can find, but rather working to improve the surrounding community. That could mean building new homes. But it could translate into helping financially strapped homeowners repair their homes to make them sound, safe, and more energy efficient. It might mean freshening up the entire neighborhood with new paint through a program sponsored by Valspar, one of Habitat's partners.
Habitat has been working with its affiliates to reframe their activities for about a year, but some of its local organizations, such as Toledo and Southwest Florida, had already started such efforts.
“What we are finding in Southwest Florida is the issue has more to do with overbuilding than lost jobs," Andrews said. "There’s already a lot of relatively new housing stock” because of foreclosures on newly built homes.
All the programs still require sweat equity from the homeowners and affordable loans to recover costs. “None of these things are give-away programs,” Andrews said.
Developing such programs has been an eye-opening experience for the affiliates. When Ohio's Maumee Valley Habitat chapter in Toledo last year started having trouble finding families who wanted to partner with Habitat to build a home, it began offering repairs for low- to moderate-income homeowners who couldn't afford to make such fixes on their own.
“The line at the door for applications for home repair was so long that we had to shut off the application process” before getting to all the potential applicants, said Mike McIntyre, the chapter’s executive director. “I think we’ve really identified a great need in this community.”
Last year, the affiliate did 17 home repair projects. “It can be life-changing, even though they are smaller repairs,” he said. “It doesn’t take us long to do them and things get better for them in a hurry.”
The average cost of the repairs, which were most often roof replacements and repair of interior drywall damaged by leaks, was about $2,500. The homeowners donated labor and paid for half the repairs, which are most often financed with a no-interest loan through Habitat.
There was a bit of a learning curve for the affiliate as they introduced the popular program. “There is a lot more evaluation (of each project) not only of the partner family, but also the project itself, trying to determine the scope of it and to identify what would be considered 'need' versus adding value to the house. We don’t necessarily do wallpaper,” McIntyre said. Families also must demonstrate more than financial need; they also must show that they can pay back the repair costs.
This year, the Maumee affiliate is slated to build eight new homes and perform 36 home repair projects. It has also targeted specific areas in its market. “We have identified certain neighborhoods where we can make great impact,” said McIntyre. “To make that impact, you have to hit it on multiple fronts.”
In Collier County, Fla., which has been one of the worst spots in the country for foreclosures, the economics don’t support building new homes for Habitat families, said Sam Durso, the Southwest Florida affiliate’s executive director.
It costs $120,000 to build a new house, including $20,000 in impact fees at a time when when Habitat can buy fairly new foreclosed homes for $60,000 to $80,000 and spend another $20,000 to bring up to current energy standards. It translates into a savings of perhaps as much as $40,000 for the nonprofit and its families when impact fees are considered.
It’s a situation Durso, a retired dermatologist who has been working for Habitat for 18 years, didn’t foresee. “If you asked me three years ago, when the economy was booming, I’d have said that we would never do rehabs,” he said.
And he doesn't expect it to be the practice in several years after the economy and housing market recovers. But right now it makes sense because Habitat isn’t getting a lot of competition in the bid to buy foreclosures, Durso said, particularly since the nonprofit can pay cash for these properties.
Like Toledo, the Southwest Florida chapter also had to adapt to its new activities. “It was a little challenging at first,” said Durso. “The volunteers weren’t quite as adept at working on the rehabs as new construction."
Most of the homes rehabbed are between 20 and 30 years old and need basics such as a new roof, new HVAC system, and plumbing fixes in kitchens and bathrooms, said Durso.
Last year the affiliate did 60 rehabs and has a goal to complete at least 50 annually. “The bottom line is to help as many families as possible," Durso said.
Teresa Burney is a senior editor at BUILDER and BIG BUILDER magazines.