Habitat enters gentrifying areas

Affiliate creates affordable housing in places such as Pigtown

November 27, 2006|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN REPORTER

The tock-tock-tock of hammers and roar of a generator echoed down Hamburg Street, familiar sounds nowadays. In Baltimore's Pigtown, rehabbers and speculators are snapping up properties, driving up prices, selling to homebuyers who can afford to pay $200,000 or more.

But the people laying down new floorboards in the 1100 block are fixing up a home specifically for someone who couldn't dream of taking on such a mortgage. Whoever buys it when it's finished will pay $100,000 at most, no interest.

This isn't the easiest place for an affordable-housing effort -- precisely why Chesapeake Habitat for Humanity is working there. It wants its homebuyers, working poor who usually earn about $20,000 a year, to move into improving neighborhoods with an established social network.

"We're making sure that low- income families are going to be able to live where folks of means are going to live," said Mike Mitchell, executive director of the group, an affiliate of Habitat for Humanity International.

After years building in struggling neighborhoods, it is now in gentrifying territory: Patterson Park, north of the popular Canton, along with Pigtown, which is west of downtown and also goes by the more affluent-sounding "Washington Village." And with that comes challenges: Average home-sale prices in both neighborhoods tripled between 2000 and the first few months of this year, according to the most recent statistics from Live Baltimore Home Center, and dilapidated shells typically sell for anywhere from $50,000 (Pigtown) to more than $100,000 (Patterson Park).

Such hurdles are far more prevalent -- locally and nationally -- than they were a few years ago. As prices skyrocketed in many metro areas during the housing boom, even comfortably middle-class buyers were pinched.

Though the U.S. housing market is in a sharp slowdown now, prices have continued to rise in Baltimore, pressing the average to more than $170,000 last month, according to multiple listing data. The city's average was under $100,000 as recently as 2002.

"The cost of property in so many urban areas has risen dramatically, much faster than in many cases our ability to raise the funds to acquire those parcels," said Stephen Seidel, director of urban programs at Habitat for Humanity International. "Even the midsized cities ... that have traditionally been really quite affordable, those affiliates are seeing their costs go up."

In Patterson Park, a nonprofit development group that formed a decade ago to revive what was then an ailing neighborhood has decided to move on to parts of the city where acquisition costs aren't so high. The Patterson Park Community Development Corp.'s most recent gut rehabs range from $250,000 to more than $400,000, thanks in part to soaring shell prices.

Pigtown, with a location near Interstate 95 and Route 295, is attracting Washington-area buyers -- who typically have higher salaries than Baltimore workers and can outbid them. Newly constructed townhouses in the Camden Crossing development are on the market for more than $400,000.

Chesapeake Habitat got a foothold in both neighborhoods because the earlier, grim years of abandonment there had left the city holding properties. The group paid the city $5,000 apiece for 11 homes in Pigtown -- settling on the deal in August -- and the same for nine in Patterson Park. With those prices and lots of volunteer work, it might manage to break even on a $100,000 sale.

Or not. The tentative budget for the Hamburg Street home, currently little more than three walls and a rotted roof, is $110,000. But Mitchell refuses to charge buyers more than a hundred grand.

On paper, Chesapeake Habitat sells its homes for their appraised value -- to avoid complaints about dragging down values in the neighborhood and to keep buyers from immediately flipping the property for an instant profit. Anything above $100,000 is rolled into a "silent" second mortgage that the homeowners don't pay unless they sell, and that amount decreases over time. (The city tacked a similar mortgage onto the homes it sold Habitat, in exchange for discounting their price.)

Funding for this work comes largely from companies, nonprofits and mortgage payments made by earlier homebuyers -- Habitat finances the deals itself. Because it charges no interest, payments are less than half what they would be with a conventional mortgage.

That works for custodian Lynn Carey, 47, who is buying a Habitat home a few blocks to the south of the Hamburg project. As she helped prime the walls, part of Habitat's "sweat equity" requirement, she smiled broadly at the thought of moving in shortly after New Year's Day.

"I'll finally have my own place," said Carey, who believes her block is nicer and quieter than the area near North Avenue where she lives now.

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