By: Don Oglesby, the President/CEO of Homes of Hope, Inc., a non-profit organization serving S.C., based in Greenville. Now 21 years in, Don continues to lead Homes of Hope’s expansion to greater impact across South Carolina. Homes of Hope is the leading developer of single-family affordable housing in the state.

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So many people are talking about the need for more affordable housing. Those of us who have been working in the field for years are thrilled that the community is so interested in this. Unfortunately, the conversation has often been limited to frustration at the need while solutions and nuances of the problem are left out due to lack of information. So, while we’re all talking about it anyway, I thought it would be good to offer some deeper talking points.

Part 1: It is currently very difficult for “the market” to provide affordable housing on its own.

Recently, Homes of Hope retained a real estate developer with 30 years of experience and a great record of success. We hired him to be the point person in our site work — both in design + execution of land preparation for builder-ready lots. After about 6 months we had a lunch meeting and at that meeting he said “Don, this is way harder than anything I’ve done!”

I gave him a knowing laugh. Yes, yes it is. Essentially, land, materials, and labor all cost what the market dictates that they cost. Affordable housing developers (for the most part) pay the same for these components as market-rate developers. If you want to build affordable housing using the donated land, donated material, donated labor model, you will never be able to achieve large, scalable results. There are just not enough donations to make a dent in our affordable housing crisis.

So, market developers can’t build all their homes as affordable housing because they need enough volume to cover their costs and grow their businesses. That’s a business decision, and no one can blame them for making it. The average developer can pass on rising costs of materials to their consumers through the sales or rental price, but affordable housing developers must find a way to put a ceiling on the final cost to the consumer without sacrificing quality.

Affordable housing, by its very definition (paying no more than 30% of your income for housing), has a price ceiling. If the family incomes you are selling/renting to are low-to-moderate incomes, the price/rent they are able to pay is “capped”. If your costs are higher than these families can pay, you cannot simply raise their price the way a market-rate developer could.

Part 2. You might be living in affordable housing.

We need to stop thinking about affordable housing as something you can see, and instead think of it as something that is simply a math equation.

Consider Robert and Julie. They are in their early 30s and supporting a family of 4 on a total household income of $140,000. Pretty good, right? I mean, they certainly don’t need “affordable housing,” do they?

Well, let’s do the math.

If their family lives in a $600,000 home, and the interest rate is 3.9% for a fixed-rate 30-year mortgage, their cost of housing will be just under 30% of their income.

Congratulations, Robert and Julie – you live in “affordable housing!”

My point is that everyone needs “affordable housing.” Even Robert and Julie… and I’m guessing that you just did the math on your own house, didn’t you?

Affordable housing is not a type of housing, or housing in a certain part of town. It is housing that is affordable to any person of any income. Right now, there is not nearly enough housing that is affordable to persons of low-to-moderate incomes. That’s all we’re talking about here.

Part 3. We love donations—but you can also invest!

We cannot donate our way out of this problem.

We are convinced, however, that there are enough community-minded, philanthropic people out there who are A.) doing well in the midst of our booming economy and B.) would be willing to accept a lower return on an investment when it creates a greater social return for their community.

We know this because our supporters have been investing in our work for years under this same premise. Affordable housing does produce some income: it’s just not market-rate income. Affordable housing can indeed repay investors something.

These investors know that their communities will be better off if the people who wait tables in their favorite restaurants, or clean the hotel rooms of visitors to our cities, or cut their kid’s hair, or mow their lawn, or teach their children, or rescue their homes when they catch on fire, or protect them when they need a police officer...can actually afford to live there.

They also know that this affordability creates investment in our community. People who can afford their home can save more and spend more – maybe even in your store or business! And if they can save more and afford more things, then maybe we don’t have to subsidize them when they can’t.

Oh yes, we are subsidizing them. When people can’t afford medical insurance, we subsidize their non-emergency visit to the Emergency Room. When they are forced to live on the street, we subsidize them via our donations to shelters or even through our tax dollars when we criminalize the experience of homelessness and incarcerate our neighbors.

Invest in our work and you’ll realize a huge social impact “return”, a huge community impact “return” and a reasonable financial return! And, unlike a donation, you can invest your money again after that. You could multiply your impact!

Now, my board + staff will be very unhappy if I don’t add this — we still need your donations! If we can’t provide programs to support the families in the homes, not to mention support for maintaining the homes, then we will all fail at this. Please keep donating!

(But call me if you’d like to invest.)

Part 4. Gentrification with justice can still happen.

Nobody likes gentrification. Nobody likes traffic either, but both happen whether we like it or not. So while we can rage against both—we are still left with each and how best to navigate them.

Gentrification is, among other definitions, the displacement of lower-income families from their homes + communities through overpowering market forces that bring higher cost residential homes to the area.

We fight against it by establishing “footholds of affordability” in neighborhoods in danger of this. By planting permanently affordable homes in the neighborhood (rental homes that we hold onto or deed restrictions on resale of owned homes), or by land-banking vacant lots to protect them for future affordable development.

But it still happens.

So, if it’s going to happen anyway, why can’t it happen with justice? Why can’t we have “Gentrification with Justice?” (By the way, I didn’t invent this phrase – it’s being talked about all over the country. I first heard it from Bob Lupton—the author of Return Flight, Toxic Charity and Charity Detox.)

Well, I believe that we can to some extent. To the extent that individuals who own property and could be accused of “gentrifying” an area, are willing to do something - to be just.

So, here’s my definition of Gentrification with Justice:

○ Don’t overbuild.

If you’re going to build a home in a low-to-moderate income neighborhood, look around at the character, size, and styles of your new neighbors. Don’t build a huge home that looks like a giant compared to your neighbor’s home and then expect to be welcomed in. Build it nicely – nobody begrudges you that – but don’t build something that screams “look at me! I’m different!”

○ Don’t fence yourself in.

Privacy fences have their place, but please, think about this unique situation you’ve entered. Privacy fences clearly communicate that you want to be left alone.

○ Participate in the neighborhood.

Most low-to-moderate income neighborhoods in our cities have great history, dignity, and pride. As such, most have an established neighborhood association that serves as an avenue for the voices of the neighborhood to be heard when speaking about conditions and needs in the community, which is critical. You may never have had to worry about making your voice heard because of your social status and income, but low-to-moderate income family’s voices are often silenced or ignored. Add your voice to the chorus they have already created.

○ Listen. Listen. Listen.

Listen – especially to the folks in the neighborhood with roots and history in it. You must not think you are Mighty Mouse “here to save the day.” You cannot know what their hopes and dreams and needs and wants are on day one. You must get to know them, be a good neighbor to them, and listen to them.

Part 5. The problem can be solved without building any houses!

Well, maybe not completely solved. But you have to admit: my headline got your attention didn’t it?

Pay your lower wage employees a living wage.

Now, if you don’t own a business, I acknowledge that you may feel that you have no say in this, but you have influence over business. You are a consumer, right? That carries influence with it.

If you do own a business, I also get it. We have to make payroll here too. I understand the market, supply + demand, and cost of labor.

But think about this: affordable housing is supposed to bring “stability.” All employers want their employees to be “stable” so they are happy + productive. So you can invest in affordable housing, (and believe me - you already are through your taxes and your philanthropy), but you could also invest in your employees who are priced out of market rate housing and head off the problem at the start.

After all, your employees are one of your businesses’ most valuable assets, right? Are they worth the investment? Won’t this bring them stability?

In Greenville, a “living wage” for a single individual, sufficient to afford a 2BR rental home or apartment, is $9.48 per hour. For families with children it is $18.32 per hour.

Think about the transformational power of lower-waged employees suddenly being able to afford housing that is in the market. This new demand may eventually raise pricing, but at least they are in the game!

We still need more housing units, but how many more could we build if we didn’t have to solve these difficult math problems of making the homes affordable for the lower-waged workforce at current wages?