Affordable housing a boon for social investors

“If anything, the downturn has helped us to see more opportunities out there,” says George Pino, chief operating officer of Learning Links. “There are more assets we’ve been looking at as well as better prices.”

There is a downside to the drop in housing prices, even for socially responsible companies. A market-invested foundation like MCF took a hit when the stock market tumbled and is doing more with less. Similarly, when Learning Links went asking for money late last year, its investors demurred. Loans are difficult, too, because banks remain conservative with underwriting. Some Learning Links residents who lost jobs needed to vacate their apartments.

But Mr. Pino is optimistic.

“Going forward though, it looks like things will loosen up,” he says. Learning Links is already looking at real estate prospects in New York City, hoping to capitalize on lower prices there, and eventually in Chicago and Miami.

In Columbus, Ohio, the drop in the housing market has forged an innovative partnership between an
affordable housing nonprofit and a local bank.

“The foreclosure crisis hit our area dramatically,” says Amy Klaben, president and CEO of the Columbus Housing Partnership (CHP). “Last year, 2008, we saw 1,600 people in default in their loans, many in foreclosure, an increase from 1,000 the year before. This year, we’ll see potentially more.”

So a regional lender, Huntington Bank, approached CHP about creating a partnership to encourage homeownership. The result: the Huntington Homeownership Alliance, a three-year, $10 million effort that funds home buyer education workshops, online virtual foreclosure counseling, and loan products designed to help families buy houses from CHP’s inventory of affordable homes.

Even as prices have dropped, the need for home buyer education is still vital.

“Financial education is a critical factor in helping families make wise choices as they look to buy and maintain their homes,” writes Maureen Brown, a spokeswoman for Huntington Bank, in an e-mail. “Huntington knows that homeownership strengthens families, communities and our economy. We believe that by working with CHP, we will help to stabilize neighborhoods as well as provide counseling to homeowners.”

Despite this burst of activity in socially responsible real estate, the biggest challenge may be sustainability. Speculators are a problem, driving the cost of properties back up and leaving homes without individuals or families inside to rebuild a community. In addition, the need is still great. Though groups like CHP can now buy five homes for a relative bargain, if there are still 15 more vacant houses on the street, “you aren’t making a market impact,” Ms. Klaben says.

As the economy recovers and real estate values rebound, this moment of opportunity may disappear.

“Unfortunately, any time property values [skyrocket] ... the first project to suffer will be related to affordable housing, because you cannot compete with the for-profit developer,” says Mr. Mermelstein, who is still in negotiations with local New York officials to secure commercial buildings for schools. Such projects are “something that should be pushed forward while the opportunity exists.”

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