Return from Exile
Post-Katrina housing thinks long-term.
Temporary housing has a way of becoming permanent, as evidenced by the fact that many South Florida residents still live in FEMA trailers more than a decade after Hurricane Andrew. An as-yet-unknown number of Katrina and Rita evacuees in Louisiana may sidestep that fate and return to their former neighborhoods now that a prototype for safer, more sustainable (and prettier) post-disaster housing has received federal funding.
The umbrella consortium Cypress Cottage Partners has received a $74.5 million grant through FEMA's Alternative Housing Pilot Program (AHPP), to rebuild four Louisiana neighborhoods. Infill projects will include New York designer Marianne Cusato's “Katrina Cottages,” as well as clusters of multifamily “carpet cottages” (which fit together like puzzle pieces for a density of up to 37 units per acre) designed by architect Andres Duany, principal of the Miami-based planning firm DPZ. Both prototypes feature panelized construction for easy assembly and are designed to withstand 220-mile-per-hour winds.
Redevelopment will focus not just on housing for displaced families, but also on long-term community building, says William Smith, CFO of Cypress Cottage Partners. Enclaves of new homes will be sited to facilitate access to education, health-care, and public transportation. The first residents deemed eligible by the state to occupy AHPP cottages will live rent-free for two years.
“There is a significant economic revitalization component to this effort,” Smith says, forecasting that home building activity will create local construction jobs, spark repopulation, and serve as a catalyst for additional private reinvestment.
“We're looking to create a blueprint for how this type of program might be implemented in other disaster scenarios, including guidelines for the degree and nature of federal, state, and local government involvement,” Cusato says. “The fact that these homes are made from panelized systems means they can be stockpiled in a warehouse and ready for deployment anywhere when disaster strikes.” - Jenny Sullivan
Subprime Shrinking
Tougher underwriting standards cut some borrowers out.
In case the current housing market wasn't bad enough, builders should be ready for subprime mortgage underwriters to require higher credit scores or bigger down payments from borrowers—and a drastic reduction in the availability of stated-income loans.
“There are borrowers looking to purchase homes who, three months ago, could have qualified at any subprime outlet in the country,” says Ron Booth, senior vice president and national production manager of the subprime division of Nashville, Tenn.–based First Horizon Home Loans. “A lot of them can't qualify today.”
The biggest impact, he says, is in higher loan-to-value deals, where both credit scores and appraisals are being carefully scrutinized. Last year, many lenders would provide a 100 percent, full-documentation loan to a borrower with a credit score of 580, he says. Now, those loans require a score of about 620 to qualify.
Builders can help themselves by contacting lenders in advance to find out what kind of buyer profile is acceptable, says Richard W. Nirk, executive director of the National Association of Residential Construction Lenders.
It's to a builder's benefit to help a subprime buyer qualify, says Scott Baughman, sales and marketing director for Premier Homes, a starter-home builder in Pueblo, Colo., whether it's a lease-purchase program to help him improve his credit or helping him find a job. “We don't just roll over and say it doesn't work,” Baughman says. “We come up with creative ways. An on-site person would never think, ‘How can I help a person get a job?' [as a way to help a borrower qualify for a loan]. But in doing that, we accomplish our goals.” - Pat Curry