Nonprofits Find Upside in Real Estate Slump
RENEE MONTAGNE, host:
And as troubled as the housing industry may be, there is a silver lining for some in the real estate market. Nonprofits are finding inexpensive land. Habitat for Humanity, which builds housing for needy families, is finding bargains on parcels the nonprofit couldn't have afforded two years ago.
NPR's Elaine Korry visited one foreclosure capital: Modesto, California.
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ELAINE KORRY: Volunteers are sanding kitchen cabinets and framing doorways in this two-bedroom stucco home. It's on a corner lot in a depressed neighborhood of Modesto, about 100 miles east of San Francisco. Gary Torrijos with Habitat for Humanity can't believe the work has progressed so quickly on a house that was completely gutted.
Mr. GARY TORRIJOS (Habitat for Humanity): Couple of weeks ago, there was just a shell. There was nothing here. You couldn't even imagine that it would be inhabitable in just six weeks.
Ms. ANITA HELLAM (Executive Director, Habitat for Humanity, Stanislaus County): The windows are in place. I can see the sheetrock's up. Looks like they'll hang doors in the coming week. Once the floor is on, this house will be ready for occupancy. It's exciting.
KORRY: Anita Hellam is the executive director for Habitat for Humanity in Stanislaus County. She says this property is typical of several the non-profit has been able to scoop up for about $50,000. A few years ago, she says, vacant lots around here are selling for twice that much. According to Hellam, it's a small upside to a terrible housing slump.
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KORRY: Hellam takes me on a quick tour of Modesto's hardest hit neighborhood, where fallout from the subprime mortgage crisis is evident in the "for sale" signs plastered everywhere.
Ms. HELLAM: Here's a house that's boarded up. Clearly, it looks like they tried to do some renovation work. There are people that moved in, speculating. This one's for sale.
KORRY: It seems each block has half a dozen properties for sale. We stop in front of one freshly painted bungalow. Plywood covers the windows, but the doorknob looks jimmied. Beer bottles are strewn about the lawn - sure signs, says Hellam, that squatters have moved in.
Ms. HELLAM: These are houses that have been foreclosed on. The families are trying to short sell. The dollar amount that they're saying that they will accept isn't necessarily the dollar amount that their bankers will accept. And so that's kind of where we're at with some of these.
KORRY: Hellam is talking with the lenders to see if Habitat could step in and buy the properties. She's not happy about this family's misfortune, but Hellam weighs that against the problems caused by abandoned properties and squatters.
A few blocks away, we pull up in front of a large parcel of land - vacant, except for three model homes built along one edge.
Ms. HELLAM: This is just an example of a subdivision that a builder intended to build out: 20 houses, single family. He hasn't been able to sell them. And because he hasn't been able to sell them, he hasn't been able to service the debt.
KORRY: Once again, a bank has repossessed the land. But since few banks really want to be property developers, Hellam sees another opportunity to buy a parcel at fire sale prices.
Ms. HELLAM: We're negotiating with the bank to purchase these finished lots for about one-fourth of what it would have cost us a year ago.
KORRY: And in this case, says Hellam, she's not so worried about the plight of the developer.
Ms. HELLAM: I would hate to think that we purchased a property from someone who was actually taken advantage of. But the idea that somebody took a risk and that they made a bad choice is a little bit different.
KORRY: Anita Hellam has run Habitat for Humanity in Stanislaus County long enough to know that the housing market is cyclical. She's sure this window of opportunity for nonprofits will eventually close as this area rebounds. But for now, she's on the lookout for bargains.
Elaine Korry, NPR News.