A recently launched homebuilding program is set to change the face of some of Kalamazoo’s most economically challenged neighborhoods while placing families in need into homes of their own.
The Kalamazoo Attainable Homes Partnership (KAHP), a cooperative effort of local homebuilders and nonprofit housing agencies aims to build eight to 10 new homes each year for a decade in several of the city’s most economically disadvantaged neighborhoods.
“This is just the right thing to do — and to do it the right way,” says Jeffrey Tafel, chief executive officer of the Homebuilders Association of Western Michigan, which is joining hands with Kalamazoo Neighborhood Housing Services (KNHS) and Local Initiatives Support Corp. (LISC) to make the program happen. “It’s a program that’s good for Kalamazoo.”
The new construction will be in the Eastside, Edison, Northside, Vine and West Douglas neighborhoods, where most of the city’s 350 vacant lots are located, Tafel says. It is hoped that the new construction will help stabilize the housing market in these neighborhoods and generate a modest increase in property values in adjacent areas.
‘Good for the city’
At first, it was difficult for Tafel to find builders willing to construct homes within the funding constraints of the program, which worked out to about $140 per square foot. The average cost for the kind of construction seen in the program’s homes is $200 per square foot, he says.
Many builders expressed an interest in participating but couldn’t swing the costs. Tafel listened, and when a $15,000 flat construction fee was established — which would allow builders to at least break even on their labor costs — several homebuilders signed on, including LandMark Homes, Osborne Construction, Wausau Homes and Martz Homebuilders.
“We tried to at least make it worth their while,” Tafel says. “There was a benevolent motivation behind their wanting to get on board. They know it’s good for people and the city. It’s one of the coolest things I’ve had the opportunity to be involved in.” Tafel says the total number of new homes proposed to be built — up to 100 — is what’s needed to see a positive impact on the local economy.
“We can only build so many a year,” he says.
Funding sources for work done in 2019 included a $312,000 line of credit loan taken out by KNHS, a $150,000 recoverable grant from LISC and $90,000 from the city’s Foundation for Excellence program, according to LISC. Program advocates are hoping for a similar level of funding for 2020.
So far, four new homes have been built, and 10 vacant lots spread out over the five neighborhoods have been identified for construction in 2020. Several lots are in need of significant rehabilitation before construction can take place, such as the removal of driveways hidden under decades of debris. In some cases, homes on these lots were torn down and the debris buried on site rather than being hauled away.
Low cost, high quality
But when construction does commence, lower costs won’t mean lower quality.
KAHP homes will have 50-year roofs meant to be nearly maintenance-free. Scratch-resistant vinyl flooring decreases maintenance costs as well, and LED lighting, plenty of insulation and energy-efficient appliances mean lower monthly costs, with KAHP shooting for $100 utility bills in the winter.
“We are aiming to keep costs low… but in no way does that mean we are skimping on quality,” Tafel says. “We want these to be Parade of Homes-quality homes.”
“There has been enormous interest” in the program, says Matt Lager, executive director of KNHS, which helps between 300 and 400 low-income people annually with a variety of services related to homeownership, from credit counseling to the securing of bank loans. “A bunch of the people we are helping here at KNHS are looking for homes but not finding what they’re looking for. These are the best houses out there for the price range.”
Lager says vacant lots are like “missing teeth” on a block, an indicator that there might be issues with the real estate market in that area. But when those spaces are filled with new homes, the market begins to stabilize, he says.
“The homebuilders’ desires to move into the city and do this work for less than they would normally earn is purely because they believe in this community,” he says. “We couldn’t have done this without their expertise. It’s been refreshing to work with them.”
One challenging reality is that the houses will almost certainly sell for less than the cost to build them, Lager says. While the houses are expected to cost between $160,000 and $180,000 to build, they will most likely sell in the $130,000-$140,000 range, says Marie Frank, marketing director of the Homebuilders Association of Western Michigan. The median home value in the city in October 2019 was $119,900, up more than 11 percent from the year before.
Lager says that not only is new housing stock needed in these neighborhoods, but there is reason to believe that there will be reasonable increases in property values on the blocks where these homes are built.
“Ten years from now we will be patting ourselves on the back,” he says.