Mountain Housing Opportunities was founded in the summer of 1988.
An outgrowth of Pisgah Legal Services, volunteers began by helping Pisgah clients with their housing needs, mainly safety-related repairs: unsafe furnaces, water heaters, roofs, rotting floors, electric hazards, bad plumbing, sewer lines and septic tanks. Within six months, with a grant from the Z. Smith Reynolds Foundation, and with then-Pisgah community educator Scott Dedman as board chairman, MHO incorporated as a stand-alone nonprofit. Its mission: “to build and improve homes, neighborhoods, communities and lives and to build hope and dignity in the people we serve.”
Affordable rentals, mixed-income ownership
In the three decades since, MHO—a Community Development Financial Institution (CDFI) certified by the U.S. Treasury—has built more than 200 houses and apartment units and financed another 300. The Del Cardo Apartments at Eagle and S. Market Streets on The Block are its first mixed-income project, with 32 apartments renting at no more than 60% of median income, and 30 at 100% of median income.
Eagle-Market Street Develop-ment Corporation (EMSDC) partnered with MHO in building the DelCardo and now has its offices in the complex. Executive Director Stephanie Swepson Twitty says, “This collaboration is always thinking about equity and inclusion, and this is a huge piece. Everything we do is under the mantra of ‘Buy local, build local, invest local, keep profits local, reinvest local.’ That ensures that residents are able both to both build assets and create wealth.”
There are four different ways to buy a home with MHO: Down Payment Assistance Program; Self-Help Home Ownership; Market-rate purchases; and Turnkey home ownership.
Helping Build Equity
Average household income in MHO apartments is $17,000/year. SSI-disability residents get less than $8,000—often as little as $600 per month. And someone working full-time at $10/hour earns about $20,000. All are eligible to live in MHO apartments, up to a four-person household earning $40,000, but an MHO renter earning $10,000 a year would qualify for the Self-Help program of ownership, building equity and family wealth.
Down Payment Assistance Program
When Mountain Housing Opportunities creates a new subdivision, its Down Payment Assistance Program helps fill the gap between the cost of a modest home and what a buyer can afford. Buyers who qualify for a standard mortgage from a bank or credit union but need help with the down payment borrow about 20% of the purchase price (a “soft second mortgage”) from MHO, at 0% interest; they pay it back when they sell the house, often many years later.
The payback reflects appreciation on the value of the house. If the Smiths paid $200,000 for a house and years later sell it for $300,000, appreciation is 50%. If they had borrowed $40,000 from MHO they pay back the original loan plus 50%, or $60,000—and keep the rest of their profit.
“The last family that paid off their loan is helping you with your mortgage, and you will help the next one. It’s a revolving loan fund,” says Dedman.
Self-Help Home Ownership
Under MHO’s second program, Self-Help Home Ownership, six families a year build their own homes. Most are around 1,000 square feet with two or three bedrooms. The USDA provides financing for the project, at interest rates as low as 1%, and Buncombe County provides some additional support. The buyer family provides sweat equity, which translates into dollar equity—and significantly lowers monthly mortgage payments relative to the value of the house.
Market Rate Houses
A third group of homes in every MHO-built neighborhood are sold at market rate to people who don’t have to qualify by income. If the family qualifies, they take out a regular mortgage from a bank and buy the house.
The 46 homes at Lillie Farm Cove in Weaverville fall into three categories. The first 18—six houses a year for three years—are built under the Self-Help program and financed by the USDA. The other 28 are divided into two groups: 15—half plus one—will be income qualified at 80% or less of the area’s medium income (compared to 60% for apartment rentals). The remaining 13 are available at market rates.
Turnkey Home Ownership
Finally, Mountain Housing Opportunities also helps people buy houses that MHO has not built. When a buyer finds an existing house but needs help with the down payment, she can get a soft second mortgage from the organization to help with the purchase. This “Turnkey Home Ownership” allows those eligible to purchase existing homes rather than new, MHO-built properties.
Thousands need housing
Given the low average earnings of a tourism-based economy, more than 7,400 households in Buncombe County pay over half their income in rent. Renters in MHO apartments save $500 a month, on average, compared to those in the private market.
“MHO has more than 300 apartments and houses are in various phases of construction,” says Dedman. “This year we should complete 200 or more, another 95 in 2020, and 212 in 2021.” New developments are in Swannanoa, Mars Hill, “and we’ve purchased apartments in six other counties to keep them affordable.”
Location, location, location
Location is a major factor in determining a home’s value. MHO looks not so much at the financial value of a house, but the value of the location to its tenants.
As an example, Mission Hospital, the county’s largest employer, Asheville High School, and A-B Tech Community College are within a mile of each other along Victoria Road. Having affordable housing nearby is crucial to helping working families meet their goals. The Glen Rock Apartments (60 affordable apartments) and the renovated Glen Rock Hotel (15) offer 75 families affordable homes within easy commuting distance of Victoria Road.
“We asked [Glen Rock] residents, “Where did you live before, compared to being nine-tenths of a mile from the hospital.”
In the first year they saved 60,000 miles of commuting, saving on gas, money, and time, and a huge impact on the carbon footprint.
Working people need convenient, affordable transit, and transit needs residents to ride, so MHO tries to build on bus lines. But while it’s only 15 minutes from the Coxe Avenue bus station to “downtown” Swannanoa, working people need more frequent buses. The Catch-22 is that the City can’t justify adding buses until the corridors are more densely built along the route.
But NIMBY—Not In My Back Yard—means that neighbors often oppose new apartments, like MHO’s Larchmont Apartments off Merrimon Avenue. When they finally got built, with unanimous approval from the city, the surrounding single-family homes actually rose in value. “They replaced run-down properties and undergrowth,” says Dedman. “We always develop something that’s much better than what was there before. And later the neighbors almost always admit that the problems they anticipated—crime, noise, what-have-you—did not happen. But it would be impossible for MHO to have to go through that for every 60 apartments we build.”
To be close to town, on a significant street, and not permit apartments, is problematic. But the city’s process holds down Asheville’s housing supply. Residents living in comfortable homes that appreciate in value monthly—do not share a sense of urgency about housing affordability and supply for those not so fortunate.
MHO partners with the Housing Authority, faith-based organizations, the healthcare community, job providers, educational institutions as it works to build a well-rounded community. And that, as Swepson Twitty reiterates, is what it’s all about.
“Reimagining the DelCardo saved the historic buildings and built new residences around them, and the community space on Eagle Street will be open to the community and for community use. All of us—HACA and MHO and EMSDC—rely on solid partnerships to provide affordable housing, have equity and inclusion, and build community.”