Self-help housing. `Sweat equity' programs let would-be homeowners invest labor in lieu of dollars. (EAST COAST)

IT'S cold at the building site, maybe 20 degrees F., when Terry Parker takes his second brief break of the day. The first flakes of an approaching snowstorm are just beginning to fall. He arrived here at an ``unearthly hour'' for a Sunday morning, and the hot chocolate now cupped in his hands is particularly welcome. ``This,'' he says, indicating the steaming mug, ``is what keeps me going on days like this.'' But the greater incentive to continue is the knowledge that he and wife, Cheryl, will soon move into a home that was beyond anything they could conceive of just a year ago.

It's a three-bedroom post-and-beam gambrel design that, when finished, would fetch between $80,000 and $85,000 on the open market in this rural Massachusetts community. In a Boston suburb, the same house would fetch two and three times that figure. So for a machinist earning $22,000 a year and with no money for a down payment, the home is an ``impossible dream'' come true. ``Look at it,'' he says with obvious pleasure, ``the beams are all solid oak.''

The Parkers aren't the only ones feeling pretty good about life right now. Ted and Terri Matteson, and Matt Battchelder and his fianc'ee, Cyndy Bourbeau, will all move into similarly substantial homes alongside the Parkers in early May.

Home owning for these three couples has been made possible through a ``sweat-equity'' program that allows them to invest labor, in lieu of dollars, as the down payment on the mortgage.

Programs such as this one in central Massachusetts are slowly spreading around the United States. They generally involve a non-profit community development organization, and always require the cooperation of a banker who recognizes the dollar value of hands-on labor by the prospective owners. To be successful, the programs also require the expert supervision of a qualified builder to coach the new owners through the building project.

Mark Shoul, executive director of the Millers River Self-Help Network, a community development corporation, watched real estate prices begin to rise sharply, while wage levels merely inched higher, and decided to do something to help. The obvious answer lay in a program where the would-be homeowners could contribute significantly in the only way they could - with their own labor. So Mr. Shoul approached Tom Muscow, a local builder, with the request to design a house that would be relatively straightforward to erect, inexpensive to heat and cool, and still have the quality and looks to compete with any other on the open market.

Mr. Muscow's came up with two post-and-beam, stress-skin panel designs - a gambrel and a Cape Cod. Stress-skin panels are sections of wall made up of a thick, rigid foam insulation sandwiched between half-inch particle board for the exterior and interior sheet rock. The lightweight 4-by-8-foot sections are simply nailed side by side to the post-and-beam frame to form the wall. Anyone who can wield a hammer and saw along a straight line can do the job.

The foam-core panels provide R20 insulation which, coupled with the tight construction, produces living space that is cheap to heat and cool, according to Shoul.

The first step in this ``sweat equity'' project is for the contractor to pour the foundation and insulated slab floor, and make and oversee the erection of the frame. In this case, all three couples, along with a few friends, raised the post-and-beam frame of each house in turn. This way, says Muscow, ``we were able to eliminate the cost of hiring a crane'' - a necessity if only one couple's labor was available. Muscow then checked that the frames were tightly pegged and square and bowed out of the project, but for a personal interest that brings him back from time to time.

A qualified construction supervisor visits the building sites once or twice a week, however, to oversee the work. In effect, he is a teacher who instructs the owner-builders on each step in the building process. In stress-skin panel construction, the entire building is closed in; then the requisite openings are cut out and doors and windows set in place.

Electrical wiring and plumbing will be done by outside contractors. Otherwise, the entire envelope (walls and roof) and second story floor - a significant portion of the home - is being done by the owners.

Upon completion, the homes will have cost $52,000, including land. Of this figure, $10,000 is the assessed value of the homeowners' labor, their down payment in other words, leaving them to assume a mortgage of $42,000. This satisfies Parker. ``Most folks,'' he says, speaking of average wage earners in the region, ``can pay off a mortgage. It's the down payment that prevents us from getting into home owning.''

The $10,000 ``sweat equity'' evaluation might appear conservative, considering the amount of work the owners have put into the project, But, as Shoul points out, they get ``additional equity from the work of their sponsoring organization, from the grant paid for their construction supervisor and from the time and energy others gave to support their program.''

A unique feature of this particular building project is a formula for shared equity in which Millers River Self-Help Network retains a share of any capital gains from a rising real estate market. This is to prevent subsidized housing from becoming ``unsubsidized'' the moment the owner decides to sell and move away.

To qualify for the program, the three couples had to have a combined income of between $18,000 and $25,000, to be sure that ``they could afford to make the mortgage payments,'' says Shoul. Prospective homeowners are also interviewed to assess their ability to withstand the stress of six months of long, after-hours work. Past experience suggests that the stress of the project either unites couples more closely or blows them apart. ``We wanted to make sure they could stand the pace and not end up in the divorce court,'' Shoul says. Both spouses are expected to work at the site.

With the first three homes nearing completion, Shoul is working on a follow-up - a cluster of about a dozen homes in the form of a small village. Affordable housing is ``something society has to get a handle on,'' he says.

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