$400 a month = Homeownership!
A Report On our Trip to Detroit's Tiny Homes
Due to the generosity of Jonathon Melnick, nine of us got a chance to travel to Detroit on a day trip to go visit the new tiny home village that's being developed there.
We sat down with Reverend Fowler who gave us an overview of her nonprofit.
Although we jumped right into the details of the homes themselves, what was really critical is that why they created this program in in the first place.
When someone is earning close to minimum-wage or is on Social Security or disability, it’s nearly impossible to own a home much less keep up with the maintenance and utilities, pay for items that need to be replaced over time such as furnaces, appliances, and hot water heaters. Someone earning only $9,000 to $13,000 a year cannot afford large expenses without going into debt.
CASS Community services came upon a solution within the tiny home concept as they understand that the homes cost much less to build, maintain, and heat and cool. What they have also discovered is that keeping very low income individuals in a rental situation will never allow them to create any significant wealth, much less feel secure in their homes, knowing that at any moment they could be evicted, especially if a financial crisis hits.
CASS is using volunteers intensively, in addition to donated materials and professional services to keep costs very low. They were able to acquire the city lots for less than $2000 each. With lots, site development (including new sewer and water lines) and new home construction, they were able to keep their total development costs under $60,000 per house. Without those wonderful volunteers and donated services and materials, total costs would likely be closer to $75,000 to $95,000 per house.
What is particularly unique is their use of the special number seven. In seven years they have a rent AND own process. By providing rental housing that then becomes a free and clear home to do and live in it as they feel fit in seven years.. The home has no mortgage at the end of those seven years, nor does the rent apply to the cost of the home. The monthly rent simply covers the cost of utilities, taxes and other small expenses that the new owner will continue to pay once they take title
The challenge in replicating this model is that each home needs to have no encumbrances at the seven-year mark so that clear title, with no mortgage can be transferred to the new homeowner. This nonprofit avoids using any public funding sources so as to avoid any impediments, paperwork or criticism of wasting taxpayers dollars.
The average affordable housing unit in the Baltimore-Washington area is now over $200,000. In DC it is close to $300,0000, Would it not make more sense to build four or five homes for permanent homeownership - For the same cost?
So let's review the statistics. They have built six so far at an average cost of $55,000 apiece with a great deal of volunteer labor at donated materials and professional services. The water hook ups cost approximately $6,000 and the foundation work which is all slab on grade, with no basements nor attic’s,.was close to $20,000. The homes have only electric and water and sewer (no gas) and use instant hot water heater's and PTAP heating and cooling systems (like the ones you see in motel and hotel rooms) which are very inexpensive compared to traditional HVAC and the associated furnance, AC condenser and ductwork. PTAPs are also very easy to install and should they need replacing, remain inexpensive and very easy to replace. So they are great choice for the heating and cooling of a tiny house.
Construction techniques and materials are very standard and not necessarily green, in the green sense, but are used to maintain an extraordinarily affordable home including long term affordability as a goal. They did use spray -n foam insulation to make the envelope particularly energy-efficient.
One item we noticed was the lack of a back door which would allow access to the backyard and the potential for a deck or patio as well as a secondary egress in case of fire.
We also noticed some homes were missing innovative ways of creating storage as we often see in tiny homes now, and some of the cabinetry and appliances didn't fit well together since they were apartment sized, not full-size. This is a lesson learned for Cass.
The homes have a security system since they did not want the prison-effect of bars or the additional danger bars create when there is an emergency or fire. With Smarthouse technology costs coming down security systems are now simple and easy to install and maintain these days.
It was very interesting to see the small scale of the homes which were smaller than they actually locked from the street, but once inside, felt much larger.
Each home has a very individual design layout and square footage which adds diversity to this already diverse community. Speaking of community, approximately 30% of residents are formally homeless, 30% are retired, and another 30% are veterans. The balance is made up of foster youth who have aged out of the system. Incomes for all residents range between $9,000 and $13,000 a year. There are no other rules or requirements. As the community grows, they will create a community association to discuss and organize community related needs and events.
Overall the concept of someone making such an incredibly low income and yet still being able to purchase a brand new home is truly extraordinary. The program has elements of others such as Habitat for Humanity (volunteers, house sponsorships and donated materials) and Housing First (get into a home first and then work on any issues to succeed in life) and supportive housing (services such as drug, mental health and life skills counseling and education).. It brings the best of these programs together with a focus on the needs of the eventual homeowner.
These homes are the first to be built in this neighborhood since early 1970s, so one of the challenges will be how to replicate the affordability and lack of mortgage in Maryland and across the country.