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Affordable housing a boon for social investors

Affordable housing purchased by social investors allows low-income earners to find community-oriented housing from Marin County, Calif., to New York City.

By Christianna McCauslandContributor / October 6, 2009

Genny McGlynn, a retired school teacher sits outside reading a book at San Clemente Place in Corta Madera, Califorina. The new development provides 79 affordable apartments to low- to middle-income families that earn between $12,000 and $73,000 a year.

Tony Avelar/The Christian Science Monitor

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Leave it to a housing market flat on its back to encourage strange bedfellows. Affordable housing advocates and upscale California communities? Educators and inner-city neighborhoods?

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It’s all part of a silver lining emerging from America’s worst housing downturn since the Great Depression. Foreclosure may be throwing millions of homeowners out of their homes, but some socially responsible investors are trying to tap the housing crisis to better their communities.

“There’s been quite a bit of interest in the last six months to a year simply because the pricing has adjusted,” says Edward A. Mermelstein, who runs a corporate and real estate law firm in New York as well as a development company trying to place public schools in foreclosed commercial property.
“Projects that didn’t make sense before do now, and there’s a lot of governmental interest in pushing this forward.”

Affordable housing in a place like Marin County, Calif., north of San Francisco, is almost an oxymoron. The median home sale price is about $679,000 – and that’s after the housing crash. Teachers, waiters, and receptionists typically can’t afford to live in the county where they work. But $679,000 represents a rare opportunity for Thomas Peters, head of the Marin Community Foundation (MCF). The $1 billion foundation had been active in affordable rentals, among other charitable activities. The plunge in real estate prices offers a chance to break into ownership.

“We’re looking to make lemonade out of lemons,” says Mr. Peters. “We’ve been used to steadily appreciating home values; the dramatic falloff in price has been 50, 60, 70 percent.”

MCF has just embarked on a $10 million, five-year plan in partnership with local nonprofits to buy and rehab homes to sell to low- and moderate-income families. The nonprofit developer retains first right of repurchase on a set of terms that allows the house to remain affordable in years to come.

That’s a win-win, in Peters’s view. Neighborhoods in danger of the blight associated with vacant, foreclosed houses are tidy once more. Buyers usually priced out of the market can gain a foothold. “Developing affordable housing [was] usually met with resistance,” he adds. “Boy, has that changed. When you have vacant homes nestled into a nice community, the neighborhood receptivity is markedly higher than it would have been a year ago.”

Teachers don’t typically flock to teach in inner-city schools. But at five Learning Links Centers in Los Angeles and two in Dallas, educators are not only eager to teach in the troubled neighborhoods, they’re on a waiting list to live there. Learning Links, based in Los Angeles, buys apartment buildings in low- to moderate-income neighborhoods and puts a learning resource center in each to help kids with their schoolwork. Teachers who live in the building get a break on their rent if they tutor children in the center.