Austin’s housing shortage is prompting innovate solutions from Austin Habitat for Humanity, the nonprofit widely known for enlisting volunteers to build homes. While its traditional model is focused on single-family homes, right now it’s seeking capital for a 50-plus condo development at 4th St. and Onion St. in East Austin near the Plaza Saltillo rail station. Phyllis Snodgrass, Austin Habitat CEO, said, “We’ve got a lot of projects in our pipeline that are different than anything else we’ve ever done before.”
The condo development will be the first multi-family, multi-story project its taken on. It will offer condos with one to three bedrooms that will sell for $125,000 to $175,000, compared to the current median price for single-family home of $309,000. The new construction will also take advantage of the affordable housing resolution passed in February that was designed to expand building opportunities for nonprofits, and it will seek funding from the city’s affordable housing bond, which passed last November.
Habitat has actually owned the land since the 1990s, when it purchased it for about $25,000 to store donated lumber, across the street from what was then a Habitat ReStore. “Fast forward to 2015, and we realized the area was changing rapidly, the value of that land had increased dramatically, and that a multi-story condo project might be the best way to bring back affordable homeownership opportunities to East Austin,” said Greg Anderson, director of community affairs for Austin Habitat. The condo development project has been years in the making, he said.
In its 34 years, Austin Habitat has built more than 450 single-family homes, enlisting more than 8,000 volunteers a year. Under its traditional model, Austin Habitat purchases the land and donors are recruited to cover the cost of construction materials. Then volunteers come in to construct the home, under the direction of Austin Habitat. Home owners also pitch in “sweat equity”, working alongside the construction volunteers. The homeowner purchases the home from Austin Habitat at an affordable sales price with an affordable mortgage loan, and the family makes payments on that loan until they have paid it off. Habitat homes also have longer-term restrictions put in place to keep the home affordable.
Most of its homeowners earn 40-60 percent median family income, which is about $68,800 for a family of four. “On a larger deal like this,” said Anderson, ‘we’re planning on working with outside mortgage lenders to help secure an affordable lending product for our clients so they can finance the home at a well below market price.” Condo owners will be asked to put in their sweat equity on other Habitat homes, he said. Snodgrass says Austin Habitat has a waiting list of about 400 families.
To fund construction, Austin Habitat is building an affordable housing capital stack, a mix of market-rate equity capital and below market-rate capital, combined with donations and low-income housing tax credits. With more condominium projects in the pipeline, it will also aim to increase profits at its ReStore store, which sells donated construction materials and home items and is now located on Ben White. Snodgrass says it has a vision for a time when it can eliminate the waiting list and instead become an affordable home placement service.
“Things can still change,” she said. “We can learn something and have to adjust. That’s just the nature of developing real estate. We’re just going to do what we have to do to make it happen.”