The Need
Millions of vacant, foreclosed homes in the United States have been abandoned and left to languish. At the same time a dearth of affordable housing combined with falling median household income has caused many Americans to struggle to put roofs over their heads.
More than a third of Americans spend more than 30 percent of their pre-tax household income on housing related expenses including rent or mortgage payments, property taxes, utilities, insurance and homeowner association fees. In 2009, 19.4 million households spent more than half of their yearly incomes on housing. Housing cost burdens often force families to make sacrifices when it comes to other necessities such as food, clothing, medical care and transportation.
A serious misconception exists that affordable housing is just for people who are destitute or living below the poverty line. Prior to the housing market’s collapse, there was already downward pressure on affordable housing. However, the housing crisis has exacerbated the situation and it continues to get worse.
With millions of people in need of affordable housing and millions of units of vacant housing available, the initiative to tear down as many as 3 million vacant and foreclosed homes in an effort to jump-start the housing market does not recognize that many of these homes can be valuable assets in a community. It would be a critical mistake to tear them down.
Upcycle – A Solution
Instead of tearing down community assets, it’s time to put this existing housing stock to work. Builders of Hope is providing a logical, sustainable and replicable solution to the housing crisis. Builders of Hope with our investment partners, will rehab and rent vacant, foreclosed homes to working and low-income families. This will stabilize neighborhoods while providing quality rentals that are energy efficient and healthy to those falling at 80% or less of AMI. One of our national partners, CESI (Consumer Education Services, Inc., a credit counseling agency), will work with renters in a credit counseling program to create a debt reduction plan to restore their credit, while others who are closer to home-buyer readiness will be counseled to assist in credit qualification for home ownership. The program will be rolled out initially in Charlotte, NC and Atlanta, GA. We anticipate adding as many as ten markets by 2013.
Builders of Hope has discovered that there is not a certification model for non-invasive sustainable rehabilitation of foreclosed and vacant residential properties. We have met with DOE, EPA and HUD to verify this gap. Most often environmental certification programs through the US Green Building Council or even Enterprise’s Green Communities focus on new construction and extreme renovation, neither of which is effective for rehabbing typical, foreclosed residential properties. The current criteria established for “Green” renovation are invasive, requiring significant rebuilding of a residence which is not cost effective. In partnership with Earth Advantage, we will develop criteria for baseline energy efficiency and reduce water consumption for the rehabilitation of this inventory.
Over the next decade, Builders of Hope envisions acquiring several thousand housing units through partnerships with national lenders, HUD, land banks, government entities, Fannie Mae and Freddie Mac. Our plan is to assemble a portfolio of homes in targeted neighborhoods with high foreclosure inventories by accepting gifted properties and strategically purchasing foreclosed properties in the same neighborhoods at wholesale prices from our program partners. Through experience, we know that clustering projects affects more significant community revitalization by creating safe havens and triggering a radiating interest in adjacent neighborhoods.
Time is of the essence in developing cost effective greening criteria as these homes will likely not undergo future renovations designed to save energy, benefiting both residents’ costs and environmental impacts. Now is the time, while these homes are unoccupied, to establish a national standard of energy efficiency, create an Energy Labeling Program (as opposed to costly certification programs), to study proof of performance and as a result dramatically impact carbon emissions and reduction of energy consumption through the retrofitting of REO homes across the US. According to 2010 Census data, there are nearly forty million homes in the US that were built prior to 1960. Homes from this category that undergo energy efficiency retrofits realize as much as a sixty percent energy savings. We cannot afford to squander this opportunity.
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