Can't sell your house? Maybe the neighbors can
Many American sell their own homes; there's nothing new in that. But when an entire neighborhood goes into the real estate business to market its own houses, that's something else again.
A Pittsburgh group is proving this idea not only works but also can be used to rescue a declining neighborhood before it hits rock bottom.
The group, which calls itself the Perry-Hilltop Citizens' Council, has just completed the first year of a social experiment that has largely stopped a steady process of deterioration in a two-ward area of the city's racially integrated North Side -- a neighborhood threatening to tip its balance from two-thirds white to all black.
Now other Pittsburgh neighborhoods are discussing how to adopt the same idea, and groups in three other Eastern cities -- Washington; HArtford, Conn.; and Springfield, Mass. -- have shown interest in it.
The Perry-Hilltop council was formed in 1962 when a subsidized public housing project was built in the all-white neighborhood, bringing with it 1,000 low-income families -- 95 percent of whom were black.
"When this happened," says council spokesman Michael Eichler, "the reactionary whites, played upon somewhat by real estate companies and others, left the neighborhood. The liberals, for lack of better word, decided they did not want to go and that there wasn't any reason why the neighborhood couldn't exist with a housing project in the middle of it."
Until the citizens' council went into the real estate business, however, the neighborhood continued to decline. Real estate firms, after talking many white homeowners into selling to blacks and moving away, eventually abandoned the neighborhood. Banks refused to grant mortgages there.
"This area likely wouldn't have improved until it hit rock bottom -- maybe five years down the road," Mr. Eichler says.
Instead, the existing racial mix has been maintained, white residents have stopped leaving, and houses for sale no longer remain on the market for months with little or no buyer interest.
Before its real estate venture could succeed, however, the biracial council had to eliminate two major obstacles: (1) a city ordinance that tacitly allowed real estate agents to pressure homeowners into selling out, and (2) red-lining of the neighborhood by local banks.
A new ordinance now forbids solicitation for real-estate transactions. And as far as banks are concerned, Mr. Eichler says. "we haven't had anybody we've been involved with rejected for a mortgage who should have been accepted. We've had initial rejections, but they've been turned around."
The achievements have not always come easily, however. In one case, the council spent a total of 40 hours working to gain a mortgage for a white man who wanted to buy half of a duplex for $7,000 on a street that is mostly black.
The keys to success in this type of venture, according to Mr. Eichler, are a sound but underpriced housing stock, establishing a real estate office right in the neighborhood, and a citizens' council willing to invest long hours. The council talks wavering homeowners out of moving away, persuades those who must sell to list their houses with it, and follows up each sale by maintaining a close liaison with the new buyer -- black or white.
In Perry-Hilltop, which has about 8,000 structures, nearly 30 properties have changed hands since the realty effort began. The average sale price is $22,000. Many of those who have moved in are single people with modest incomes, such as social workers, nurses, and municipal employees.
Because no one in the citizens' council was a licensed real estate broker, the group had to affiliate with a commercial firm, Northern Shore Realty, and share the commissions on all sales. Sales people are required to come from Perry- Hilltop, and no listings are accepted outside the neighborhood. The first year's profit to the realty firm will be about $5,000 -- "and a lot of good PR," Mr. Eichler says.
In two years, however, the citizens' council hopes to establish its own brokerage firm, selling shares of stock in the neighborhood and keeping the commission for itself.
For any group interested in copying the Pittsburg formula, Mr. Eichler stresses the importance of forming a citizens' council first. Otherwise, the element of neighborly influence, before and after a sale, would be lost -- and possibly hard-earned momentum as well.
"We feel that if we would slack off, the same previous business practices would again prevail," Mr. Eichler says.
The Perry-Hilltop effort not only has halted the decline of the area, it also has brought such positive spinoffs as a local Brownie troop, a Welcome Wagon service, and a privately run child-care center. At the same time, many neighborhood homeowners have begun making major improvements to their properties.
Pittsburgh housing director Paul Brophy, who has followed the Perry-Hilltop project closely, calls it "just right for this neighborhood." But he sees potential dangers if those who would replicate it do not walk the same fine line that Mr. Eichler and his fellow citizens' council members have:
"This could very easily become a program that sought to excluse minorities moving into the neighborhood . . . . You'd have to evaluate, going in, exactly what the circumstances were in the neighborhood -- whether you had a group of whites and blacks that were interested in a future for the neighborhood that was racially integrated before you could begin to do any organizing, as he did in this area."
Still, Mr. Brophy says, the Perry-Hilltop project is "worth some national attention. This is something other people ought to look at and see what potential it has."