Correction to This Article
This article about nonprofit housing developers turning to the construction of condominiums incorrectly identified a condo project being built in Fairfax County by Habitat for Humanity. Its name is Maple Ridge, not Madison Ridge, as it was also rendered in several photo captions.
Madison Ridge condominium

A hand up, together: Housing charities use condos to boost urban homeownership

By Maryann Haggerty
Special to The Washington Post
Saturday, February 13, 2010

They won't get granite kitchen counters or exotic hardwood floors, but nine Northern Virginia families are about to become condominium owners.

The nine-unit Madison Ridge condo, off Lee Highway just west of Fairfax City, is the newest project of the Northern Virginia chapter of Habitat for Humanity, the nonprofit developer best known for its volunteer-built single-family houses. The building is one of a smattering of condos built by nonprofit organizations around the region. While condo development may have embodied some of the worst excesses of the housing boom, these properties can provide a relatively low-cost entry to homeownership.

"This has been one of my dreams all my life, that I wanted to build my own place," said Luella Brown, 42, a cook at a retirement home in Reston. She and her son Orlando, 20, will soon move into a new two-bedroom condo at Madison Ridge.

The Habitat model, which relies heavily on donations and volunteers to keep purchase prices low, requires that would-be homeowners work a set number of "sweat equity" hours on their or other homes. The Browns, who were homeless a few years ago, together put in 500 hours of labor. Like other Habitat owners, they will buy their unit using a no-interest mortgage issued by the organization. Two-bedroom units in the building will be priced at about $140,000, three-bedroom units at about $160,000.

Madison Ridge is the second condo project for Habitat for Humanity of Northern Virginia; its first, Westbrook Forest, is a 12-unit building next door that was completed in 2007. There's a third planned for southern Arlington County.

"If we had our choice, we would be building single-family [houses] on infill lots," said Karen Cleveland, executive director of the Northern Virginia group. It's simpler, she said. Condos are more difficult to construct and manage, but the group can't afford single-family houses, she said.

Habitat chapters in other high-cost areas including San Francisco, Boston and San Diego have also built condos. No Maryland chapters have done so, according to David A. Minges, executive director of Habitat for Humanity Maryland.

In the District, the Habitat chapter plans to break ground this spring on its first condo projects, three two-unit buildings in the Ivy City neighborhood of Northeast. "It just makes sense . . . to serve a larger number of families in urban areas by building condos," said communications director Heather Phibbs. Nonprofit developer Manna Inc. has built or rehabbed hundreds of units of affordable housing in the District, many of them condo buildings. It has five condo projects under construction or being marketed.

In a high-cost urban area, multifamily projects make sense, said George Rothman, Manna's president. His group has developed some buildings as co-operatives rather than condos. Co-ops are particularly common in the District in situations where city money has helped tenant associations buy their buildings. However, Rothman prefers condos because it's easier to get construction loans and mortgages.

The mortgage meltdown has raised questions about whether there has been too much emphasis on homeownership for families that may not really be able to afford it. But groups such as Manna and Habitat that focus on ownership as a route out of poverty say that education can avert problems. "We're only aware of two of our buyers who have been foreclosed on in the last five years," Rothman said -- and in both cases, those were owners who refinanced out of their original 30-year, fixed-rate loans into riskier mortgages.

"Affordable" housing generally means housing that is subsidized in some way, whether it's through donations, tax credits, grants or low-cost government loans. For instance, the Virginia Housing Development Authority annually provides 8,000 to 10,000 mortgages to buyers who fit its income limitations and finances the construction or renovation of about 10,000 rental units, according to Michael Scheurer, the agency's Northern Virginia representative.

Although condos can be less expensive than other types of housing, the agency is particularly cautious in providing mortgages to buyers, Scheurer said. That's because a project that's poorly managed or has too many investor-landlords is risky for a lender. So, for instance, loans are available only in condos that are completed, where no more than 5 percent of owners are delinquent on assessments and where less than half the units are investor-owned.

Any type of structure can be owned in condominium form, including single-family houses. The most common, though, is a multifamily building where people own their individual apartments and share ownership of common areas such as lobbies and roofs.

Because people have to cooperate to maintain their shared property, condo living has a personal element -- epic battles have erupted over such seemingly small things as lobby decorations.

In the Habitat projects, homeowners are chosen before construction begins, and they work together on the construction site, which bonds them as a group. "The homeowners just instinctively knew how important it was to build a relationship with their neighbors," Cleveland said of her group's two projects.

Brown, the soon-to-be homeowner, agreed. "We laugh, we talk. You already know the neighbors. . . . It feels really good."

Tigist Terefework, 46, another future Madison Ridge homeowner, said her time on the construction site taught her not only how to work with tools, but also how to communicate with her new neighbors. "They are very nice. I am happy with them," she said.

Habitat's required homeownership classes emphasized that "while it may look like an apartment building, it isn't," Cleveland said. "It's your home; you own it,"

Still, residents of the first building initially would call Habitat when things went wrong, "just as they would call a landlord," Cleveland said. But those calls soon tapered off as people got used to condo life.

The nonprofit developer AHC last fall finished a 10-unit condo in the Nauck neighborhood of Arlington County. It has also participated in other condo projects, but executives there said that's not their group's focus. Most of AHC's ownership properties are townhouses while most of its multifamily buildings are rentals.

In the case of the Nauck building, the land was donated and the donor asked that it be developed as for-sale units, according to Walter D. Webdale, AHC's president, and Carlton G. Miller, the director of its Homeownership/Construction Management Division. Generally, when a property is designed for low-income families -- those with less than 80 percent of the local median income -- rental is more appropriate because it doesn't require as large as subsidy to bring it within reach, Webdale said. And, he pointed out, "there is tremendous demand."

But condos have a role. AHC owns and will renovate 41 units in a project on Key Boulevard in Rosslyn. The plan there is to build a mix of subsidized rentals and market-rate condos, Webdale said. "We use the proceeds from the condos to subsidize the affordable side."

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