Habitat: Buying Homes on Bank Foreclosure Listings Cheaper

by Simon Lindsay on Foreclosure Listings

Even with voluntary labor, it is still cheaper to purchase homes on bank foreclosure listings than to build new ones. This is the conclusion made by the Charlotte, North Carolina chapter of the Habitat for Humanity.

As a result, the Habitat for Humanity of Charlotte is among the first in the United States to start purchasing houses in neighborhoods severely affected by the foreclosure crisis. The organization made its purchases in neighborhoods where a third of properties are abandoned and vacant and due to be placed on bank foreclosure listings.

The average prices of foreclosed properties in troubled neighborhoods in Charlotte are $38,000 up to $55,000, an almost 50 percent drop from the original price.

Habitat for Humanity associate director Meg Robertson said that the organization is purchasing homes on bank foreclosure listings for a reduced priced of almost $30,000 and allots $10,000 for repairs and improvements. Building a new home would cost as much as $60,000, giving the organization a savings of up to $30,000 per property.

And another benefit of buying foreclosed homes instead of building new ones is the reimbursement that the organization is expecting to get under the program of the U.S. Department of Housing and Urban Development that aims to strengthen and stabilize neighborhoods reeling from the effects of the foreclosure crisis.

The foreclosure crisis has severely affected Charlotte more than any other cities in the Carolinas. In 2008, the city posted 8,000 foreclosures and in the first few months of this year, foreclosure filings already rose by 30 percent.

Most foreclosures occurred in starter-home communities located in the city’s northwestern area where properties not over five years old are left vacant by their owners. These communities are the target of Habitat for Humanity’s Neighborhood Revitalization Initiative.

For 2009, the Habitat is expecting that out of its 77 projects, 30 would be foreclosures. Under the initiative, the foreclosed houses will be renovated, refurnished and re-sold to fixed-income working families.
The initiative offers homebuyers zero down payment and interest and the sale price will be based on the ability of the homebuyer to pay. Additionally, homebuyers will be required to do volunteer work for at least 250 hours.

Already, Habitat for Humanity has purchased five homes on bank foreclosure listings in Windy Ridge, Barrington and Grass Meadows subdivisions.