Christmas will look different this year for Inarvis Ramos’ family.
They will have left the small North Philadelphia rowhouse they rent and be living in a larger one with room for a big tree — exciting for her two children under 10 — and nice sofas that aren’t from Ikea — exciting for her.
Ramos and her 23-year-old son will close next month on the three-bedroom house, which was recently renovated after standing vacant for a decade. Their monthly mortgage payment will be about $1,000 — less than their rent.
“I’m happy,” said Ramos, a 43-year-old first-time homebuyer who works at a nearby school. “Excited for a new step, sort of new beginning.”
Her purchase also represents a new step for the city’s Turn the Key first-time homebuyer program. For the last four years, it has subsidized sales of single-family homes newly built on city-owned vacant land.
Ramos is part of a pilot initiative in which the North Philadelphia-based community development corporation HACE is renovating existing homes and making them affordable for households with lower incomes. City officials and funders hope the pilot can become a model.
Turn the Key buyers pay an average of $183,500 for new homes after subsidies and grants. But HACE has been able to sell rehabilitated homes for $160,000 through the program thanks to the Philadelphia Housing Authority’s donation of houses, subsidies, and a grant provided by the city, and funding through LISC Philadelphia, a nonprofit focused on supporting community development.
“We’re getting very creative to serve families that really cannot afford a traditional Turn the Key property,” said Maria Gonzalez, HACE’s president and CEO.
Depending on the project, Turn the Key is open to homebuyers making up to 80% or 100% of the area median income, which is $122,700 for a four-person household. But as of September, the average buyer’s income was much less — 57% of the area median, or about $70,000 for a household of four.
Through the pilot program, HACE and its partners have made newly renovated homes affordable for households making less than half the area median income. Ramos’ four-person household, for example, makes about 37%, or roughly $45,200.
Angela Brooks, Philadelphia’s chief housing and urban development officer, said the pilot “proves rehab can be a part of how we expand homeownership.”
“Philadelphia has tons of vacant houses with good bones,” Brooks said. “Rehabbing them can save money compared with building new, it keeps the character of our blocks, and it turns an empty house into a home.”
Cutting development costs
In the established program, the city essentially donates vacant land to developers through the Philadelphia Land Bank. That cuts development costs and the new home’s sale price.
Through the Philadelphia Housing Development Corp., which administers the program, the city contributes up to $75,000 to buy down the mortgage and lower the price for the homebuyer. Buyers also can get up to $10,000 in assistance through the city’s Philly First Home grant.
Buyers need to complete housing counseling, have minimum credit scores of around 640, and qualify for mortgages.
As of September, developers had sold about 470 homes through the program, according to the executive director of the Philadelphia Land Bank in a report to its board. More than 200 more homes were under construction.
Monthly mortgage payments average $1,400.
The program got a big boost from Mayor Cherelle L. Parker’s $800 million plan to build or repair 30,000 homes.
A twist on Turn the Key
Andrew Frishkoff, executive director of LISC Philadelphia, said the organization supports the established Turn the Key program and has financed developers’ construction of new homes. But LISC saw existing vacant homes as potential missed opportunities.
Making newly built homes affordable for households with lower incomes is difficult because of the cost of construction. Renovating a home is typically less expensive.
“We were looking at how [we could] play a role in trying to reverse a trend of outside investors buying single-family homes and turning them into rentals,” Frishkoff said.
His organization got funds from the Pennsylvania Housing Finance Agency and the U.S. Department of Housing and Urban Development to help developers acquire and renovate properties that would have appealed to investors and to help households purchase them for below-market-rate prices. LISC is working with HACE and other local nonprofits that develop housing.
“We knew they were encountering challenges in some cases in acquiring properties or coming up with the budgets to repair them, and more importantly, being able to make sure they sold them at a price lower-income residents could afford,” Frishkoff said.
All five Turn the Key homes that HACE has renovated so far have been in the Fairhill area of North Philadelphia in City Councilmember Quetcy Lozada’s 7th District.
The pilot “shows us what is possible when we invest in homes and properties already present in our neighborhoods,” Lozada said. “Rather than allowing vacant properties to remain symbols of neglect, HACE is transforming them into quality, affordable homes and creating opportunities for families to build stability and wealth.”
Deeper affordability
Lozada is among the Council members who have pushed back against Turn the Key developments, because homes aren’t affordable for constituents.
But, she said, “I strongly support projects like Turn the Key when they are intentional, inclusive, and designed to benefit the people who have called this community home for generations.”
The pilot initiative includes additional subsidies, which Lozada and other Council members have called for.
LISC Philadelphia is offering homebuyers tens of thousands of dollars in grants. It is distributing $40,000 awards in this first phase of the pilot with HACE, but it is prepared to give more if needed in future phases to match “what [buyers] really need to afford the home,” Frishkoff said.
LISC has started with about $1.3 million for its “affordability-gap” subsidies.
‘I have a house’
For this initiative, the Philadelphia Housing Authority donated single-family houses to HACE.
Kelvin Jeremiah, PHA’s president and CEO, said the city’s affordable-housing crisis requires a multipronged approach, creative solutions, and strong partnerships.
“We have properties that were uninhabitable being used for affordable homeownership in a neighborhood and in a community where we’re seeing increasing home values displacing a lot of local residents,” Jeremiah said.
Veronica Feliciano, a 32-year-old general manager of a Northern Liberties restaurant who has family in Norris Square, bought her house in the neighborhood in August.
She had always wanted to be a homeowner, but she felt discouraged by high home prices. Through the pilot program, Feliciano was able to buy her two-bedroom, 1½-bathroom, fully renovated house for $160,000.
“It’s so surreal honestly,” she said. “I literally walked in today and thought, ‘I have a house.’ I can’t even believe it.”
Feliciano likes her home’s layout and natural light. She is close to amenities, her job, and friends. And she has a large yard for hosting gatherings and for the flowers, herbs, vegetables, and fruits she wants to grow.
Feliciano’s mother, Annie Feliciano, said she’d always believed her daughter would one day become a homeowner.
“But I never imagined that as a first-time homebuyer, she would be able to afford a beautiful, completely renovated home right here in the neighborhood where I grew up,” she said.
Veronica said HACE made her purchase as easy as possible and is still offering support.
“I’ve been telling everybody about the program,” she said. “I hope that they get more homes and they renovate more homes.”
Looking ahead
HACE is the first nonprofit to renovate houses through Turn the Key. But LISC Philadelphia also is working with Xiente and Habitat for Humanity Philadelphia, which are in early stages of following in HACE’s footsteps.
Of the five houses HACE has renovated so far, three have been sold, one is under contract, and one is available for sale. In the next phase of the Turn the Key pilot, HACE plans to rehabilitate six more houses.
HACE’s CEO said she wants the initiative to keep people from being priced out of their communities.
“Homeownership is a way to build wealth for many of our families,” Gonzalez said. “And we want to make that affordable for families that typically would not have a chance to buy a home in today’s market.”
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