Habitat for Humanity International, the venerable Georgia-headquartered nonprofit best known for erecting affordable and energy-efficient stick-built homes (and the occasional prefab hybrid), has drifted away from its new construction roots to focus more on rehabbing fixer-uppers, many of them foreclosures and many of them located in down-and-out neighborhoods struggling to pull themselves out of blight.
The reason that Habitat has decided to focus more on renovating and less on from-the-ground-up homebuilding in recent years is simple: Buying land isn’t as affordable as it used to be.
Overseas, where the organization performs a majority of its hard hat-centric do-goodery for low-income and displaced families in need of housing, the emphasis is still very much on building. As reported by The Wall Street Journal, 12,652 homes were built and 4,832 homes were renovated by Habitat volunteers outside of the U.S. during the organization’s last fiscal year ending in June.
Like non-domestic projects, new build Habitat projects in the U.S. still outnumber renovations (3,233 versus 1,435 during the last fiscal year), but those numbers are shifting. Renovations more than doubled from 2008 to the end of Habitat’s 2014 fiscal year. New construction rates fell by as much as 31 percent during that same period.
As mentioned, the spiking costs of available/buildable lots have made it more difficult for Habitat to fulfill its mission of bestowing in-need families and individuals with affordable, healthy homes equipped with no-interest mortgages. As is tradition, the future residents of Habitat-built homes pitch in and help with the construction process.
"The biggest part is land,” Habitat CEO Jonathan Reckford explains to the Journal of the shift in focus. “If we can’t get it donated, we have to buy land. And that becomes a big part of the cost.”
Elaborates the Journal:
Habitat’s struggle with land prices mirrors that of other home builders and highlights a factor inhibiting home construction. The recession and housing crisis brought residential land development to a halt in much of the U.S. It since has taken many years for land development to regain momentum, and it still has much to recapture. This year, the pace of construction of single-family homes hasn’t exceeded 68% of its annual average since 2000, Commerce Department data show.
Land typically can represent no more than 20% to 25% of a home’s price in order for the builder to reap an acceptable return on the project, though the figure varies by market. If that portion of the cost is increasing at double-digit-percentage rates, it pushes up the home’s cost, often by a smaller amount, and squeezes the builder’s profit.
For Habitat for Humanity, the nonprofit group is doing fewer land deals, because high land prices make it challenging, if not impossible, to build affordable housing without incurring a loss.
Although increasing land costs have proven to be a burden for Habitat, the organization’s renovation work still provides a huge positive impact. In areas plagued by abandoned and derelict homes, tackling forsaken fixer-uppers can be even more beneficial than building from the ground up somewhere else. Instead of creating new communities from scratch, older communities are reborn and revitalized, attracting new homeowners and luring back residents and businesses that may have fled to less-blighted ground.
With the holiday season in full swing, there’s never been a better time to support a local Habitat for Humanity chapter in your neck of the woods, either through a charitable contribution or through good, old-fashioned labor — volunteers are always needed. And if you plan to use your holiday vacation to tackle a renovation/remodeling/redecorating project at your own home, be sure to swing by a Habitat for Humanity ReStore to pick up any materials or equipment or to donate leftover supplies when you’ve wrapped up your project.
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