[Editor’s note: Merry Christmas! This week, we’re taking time off to focus on our loved ones, so we are sharing some of our favorite stories from this year. Keep an eye out for our top features from the archives as we rest and get ready for a brilliant 2019! Cheers, from Candy and the entire staff at CandysDirt.com!]
As new construction of single-family homes continues to become more expensive, even existing homes in affordable price points can be as fine as hen’s teeth in high-demand areas like the Bishop Arts District of Oak Cliff. But one community development corporation is aiming to change that — starting with one condo development.
It’s been a steady refrain for almost a year among economists and builders — construction nationally isn’t getting any cheaper, with tariffs, skilled labor shortages, increases in land costs, and increased costs in construction materials. In February, it was almost certainly the consensus at an affordable housing conference at the Dallas Federal Reserve that one entire segment of new single-family home construction — homes priced less than $200,000 — had virtually disappeared from the market. A study in May of the area all but confirmed it.
Add to that a post-recession circumspection regarding lending and income, and the fact that wages have not kept pace with housing costs, the previous backbone of the American housing market — people making around $50,00 a year — suddenly finds that it cannot afford to buy a home, renting has become more of a reality.
“Anybody who has a job right now making $40,000 to $50,000 a year doing repetitive work is an endangered species of homeowner,” James Gaines, the chief economist at the Real Estate Center at Texas A&M University, said in February. “It’s not the spotted owl, or the horned frog. It’s those people.”
And rents aren’t that much better. While there are pockets of more affordable one-bedroom units, the average rent for a two-bedroom apartment in Dallas is about $1,124, meaning the average minimum-wage worker would need 2.7 full-time jobs to afford one.
But James Armstrong of Builders of Hope said that the community development corporation he helms is aiming to make more Dallasites homeowners by creating affordable housing opportunities like the soon-to-be-completed Saragosa Condos located at 312 Patton Ave.
But the journey to Saragosa started years earlier, with a business model that allows Builders of Hope to engage in the $250,000 to $300,000 market in Dallas, and use the proceeds to fund projects like Saragosa, where families will be able to purchase two-bedroom, two-bath condos for $125,000, which could make their mortgage payments less than $900 a month.
The corporation builds in West Dallas, Pleasant Grove, and Oak Cliff, and began as a ministry aimed at helping families in West Dallas with resources to overcome poverty. Voices of Hope Ministries, as it was then called, offered youth programs of all kinds, and a housing development program. In 1998, the board voted to separate the outreach program and the housing development program, and by 2002, the organization had changed its name to Builders of Hope CDC.
Armstrong said that to avoid over subsidizing homes — a situation that can happen when an affordable home builder relies on city subsidies to cover almost half the cost of construction, and then the buyer is also receiving a subsidy to assist in the purchase of the home — BOH uses a different model.
“We don’t go that route,” he explained. “We are actually building homes in the $250,000 to $280,000 range, and we use that activity to finance our mission.”
The organization is also working on a subdivision across from Skyline High School, where they are building homes in the $250,000 and up range, and are using the proceeds from that to finance the affordable home model.
“It allows us to sell homes in that $110,000-$125,000 range, the affordable home range,” he said.
The Saragosa project will ultimately offer 10 units at that $125,000 price point. The condo development was built in 2006, Armstrong said, but the recession hit and the original developer found it harder to sell the units.
“We took it over in 2011,” he said. “It was meant to be a condo development, and the crash happened in 2007-2008, and it made condo financing almost impossible.”
BOH rented out the units for a time, but knew that there was an opportunity there to create more homeowners.
“We saw an opportunity for families to get in and be able to capitalize on the market over there in the Bishop Arts District,” Armstrong said. The profit margin isn’t high — Armstrong said it’s about 10 percent plus cost — but the $125,000 price point means that families could afford a home for about $900 a month — cheaper than the average rent for a two-bedroom apartment in Dallas.
BOH partnered with the city in the Saragosa project, too, and the homes are deed restricted because of the way they were funded.
“We gave up a lot of profit, so that a family could go into that area, and maybe stay there for five or six years, and maybe they sell, and make a nice profit,” Armstrong said.
“We saw a creative opportunity to get families in an area where development is happening all around,” he said. “We renovated the property to look like what is being built over there, but sell it at a price that middle and lower-middle-class families can afford.”
But what do the condos look like? Realtor Stephen Lewis with Ink Realty, who is the listing agent for the condos, said he feels prospective buyers will be pleased when they look at the units (which are coming on the market in phases).
“These condos have been a hidden gem in the community since they were built in 2006,” Lewis said. “Originally for lease when they were built so they were never owner-occupied, now these condos have the opportunity to be sold to low-to-moderate buyers at an affordable price.”
“Builders of Hope has given the Saragosa Condos life with modern updates for the next owners to enjoy.”
Those updates include in-unit washers and dryers, granite countertops, new flooring, and stainless steel appliances.
The first phase of units will come on the market by next month, with the second and third phases scheduled for completion by October and December, respectively.
“An Open House will be announced soon in the coming weeks as units come to a completion,” Lewis said.