Rapidly increasing property values have forced West Kootenay Habitat for Humanity to sell one of its volunteer-built homes and a vacant lot in Nelson.
The market value for both the home and the land have more than doubled in the past 10 years and, according to Habitat for Humanity board member Kathy Fair, they are no longer affordable for the families Habitat works with.
“Canada Revenue Agency, requires that our homes be sold at fair market value,” Fair explained. “For a Habitat family to afford mortgage payments, the house can’t be worth more than $250,000. That’s pretty much our maximum.”
The house they’re selling is a three bed, two bath, single-detached home on Creek Street in Uphill, listed for $279,000. It was worth closer to $110,000 when the first family moved into it in 2001.
“For what we can sell it for now, we could build two more houses,” Fair said, noting money from the sale will go into a fund earmarked for future Nelson projects.
The vacant land is on Slocan Street in Rosemont and is worth about $82,000. City of Nelson gifted that property to Habitat for Humanity in 2002 when it was worth $24,500. Over the years, Habitat has paid around $4,500 in property taxes for the land but has never been able to build on it (though it did build on an adjacent lot that the city donated at the same time).
“It’s very uneven and would be difficult for Habitat volunteers to develop without added costs that would, again, push the house up out of that affordability range for our families,” Fair said.
Instead the board decided to sell the land — donate 15 per cent of proceeds to the Nelson’s Affordable Housing fund, since the land came from the city — and invest the rest in a future Habitat project locally.
But what can they build new that won’t increase in value?
“We really don’t know. That’s what we’re working as a board to try to figure out,” Fair said.
In larger cities, Habitat for Humanity builds condos and row houses. In Nelson, multifamily homes such as fourplexes might be the way to go, though it can be hard to find a large enough piece of land. Building very small homes on infill lots is also an option.
“If we build something 700 square feet on an inexpensive piece of property, it might not increase in value as fast,” Fair said.
There’s also talk of buying existing homes that need work, and fixing them up for Habitat families to live in. Even with the improvements, an older home won’t be worth as much as a new one, Fair pointed out.
West Kootenay Habitat for Humanity has build three homes in Nelson, including the one for sale. The organization is structured to be self perpetuating. They build a house with donated materials, volunteer labour and fundraise all the other costs, so that the house is completely paid for by the time its ready to occupy.
An eligible family will then get a zero-down and zero-interest mortgage on the house, directly from Habitat for Humanity, and their mortgage payments go towards future builds.
“The more homes we’re collecting mortgage payments on, the more we can build,” Fair said.
Generally, families need to have a household income around $35,000 to qualify. The goal is to set the mortgage payments at 30 per cent of the buyer’s income, and Habitat will amortize its mortgages up to 35 years to achieve this. Conventional mortgage payments for a $250,000 home would usually be around $1,400 per month, but Habitat can bring the payments down to around $850.
“We believe that every family deserves a safe, decent and affordable place to live and raise their kids,” Fair said. “A lot of organizations working on affordable housing focus on low-cost rentals; we’re the only one that helps families get into their own home to start building up equity in the family.”
Habitat for Humanity is currently looking for a family to buy a half duplex it built on Creek Street. Application forms are available, until December 31, at Share Nelson, the Salvation Army and habitatwk.ca/apply.html.