Housing group gets grant to buy, rehab and sell more than 200 homes
Corilyn Shropshire Chicago Tribune
Published: October 14, 2015
NHS aims to buy and renovate more than 200 homes in targeted neighborhoods, then sell them to local residents at market rates. The group hopes to help 180 to 240 low- to moderate-income residents become homeowners during the next several years. NHS plans to raise an additional $3.4 million for the effort, topping out the initiative at $5 million.
"The overall goal is to come in and buy houses, rehab them and sell them back to first-time homebuyers at an affordable level," said Kristin Faust, president of NHS. "There are for-profit developers in the neighborhoods that are buying and rehabbing, but a stronger need is to create affordable homeownership," she said.
NHS is still deciding which neighborhoods it will focus on, officials said, but the Chicago communities of Belmont-Cragin, Hermosa, Humboldt Park, Pilsen, Woodlawn, Chatham, Auburn Gresham, Brighton Park, Morgan Park and West Pullman have been targeted. It also hopes to add several suburban communities, Faust said. They hope to begin buying later this year and selling homes next spring.
Affordable, move-in-ready housing has been elusive for some potential buyers in these targeted communities as the foreclosure crisis has left some homeowners underwater and others unable to pay their mortgages or make needed repairs. In many cases the homes need major renovations. Some have been sitting vacant.
As the city makes its way out of the housing crisis, NHS said it sees the funds as an opportunity to breathe new life into sputtering communities. "If we do this, it kind of proves the market for others," said Faust.
The program is geared at middle-income earners - not necessarily those earning below the median income in the area, said Robin Coffey, NHS' assistant deputy director. "Most of the new construction in the city is in condos, but (of) the stand-alone single-family homes, the only ones I've seen being built in the city are usually marketed at upwards of $500K, and that's not the market that the average homebuyer - the middle-income homebuyers in the city of Chicago - is looking for," Coffey said.
While the rental market is sizzling, selling instead of leasing the renovated homes is in line with NHS' mission to revitalize neighborhoods. "There's an incentive for developers to rent, because they can make money. We want to promote homeownership," said Faust. "We believe that for a community to be healthy and viable, it needs to have a core of homeowners invested in the neighborhood."
The group plans to tackle a cluster of homes in a neighborhood at a time, and work with local banks to help buyers get financing. NHS also will continue to provide homebuyer education classes and individual homeownership counseling to prepare potential homebuyers. Potential buyers with down payments of 3 percent can work with NHS' mortgage lending affiliate to secure loans.
The initiative is in partnership with the Washington, D.C.-based National Community Reinvestment Coalition, which hopes to raise $80 million from financial institutions to buy, rehab and sell 4,000 homes in 10 to 15 communities across the nation. So far, it has raised $50 million and is also working in Delaware, Florida and Pennsylvania.
The coalition assisted with the grant from Citi Community Development and is working to help NHS secure the remainder of the funding.
"You're trying to create a solid base," said John Taylor, president and CEO of the coalition. "If you take a block or two and rehab a significant number of houses on those blocks you can see ... the regeneration," he said.
The project dovetails with a program launched this year by the Cook County Land Bank Authority that purchases single-family homes in Chicago neighborhoods and suburbs and then waits for developers to buy them. NHS hopes to buy, rehab and then sell some of those homes.
This isn't NHS' first foray into housing development. Throughout the 1990s and until the housing crash, the group redeveloped properties on a much smaller scale, about five homes a year, Faust said.
And while developers are pouncing on up-and-coming neighborhoods in search of profit, NHS officials said they aim to merely provide a return on investment to their funders and generate enough money to pour back into rehabbing more homes.
"The model is showing that while we won't make much profit on every sale we do, we will be able to cover costs," Coffey said.
"We'll go to houses that don't have to be stripped to the studs," added Faust, "We have to be selective about the house we buy and strategic about the neighborhoods and then show there's quality," she said.
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Posted in Auburn Gresham in the News, Business, Housing, Economic Development