Philadelphia Area Offers Unique Affordable Housing Project

Affordable housing opportunities are a challenge in many cities as rising home prices and a lack of housing inventory widen the affordable housing gap.

In Philadelphia, a unique opportunity exists for people to purchase an affordable home in a neighborhood that’s seeing housing prices escalate.

The Mamie Nichols project in Point Breeze consists of five units located on a property with a 99-year ground lease. The affordable housing will sell for $150,000 to people under at or under 80% of area median income so roughly $50,000 for a household size of one or $70,000 for a family of four, in a neighborhood where similar housing starts at $350,000.

The project, created by the Women’s Community Revitalization Project, ensures the new houses will be available for purchase, but they will also be permanently affordable because they will be part of a community land trust, a strategy for preserving affordability that has become increasingly popular across the country. The project was named after Mamie Nichols, a much-honored community leader who received the William Penn Human Rights Award from the Philadelphia Commission on Human Relations in 1980. WCRP also runs the only other extant land trust in the city, but that one only covers rental housing.

PAR Treasurer Al Perry, a broker in Philadelphia, said the affordable housing program is distinctive because of the 99-year ground lease provision.

“Critics of affordable housing programs often argue that the programs don’t provide consistent opportunities once the property is sold,” Perry said. “Under this provision, buyers purchase the building but lease the land for $25 per month. If generations of family want to continue to live there, they can continue to lease the land for 99-years with an option for another 99 year renewal.”

“If they opt to sell the home, the owner can earn the equity on the building and some appreciation in the marketplace, however, they can only transfer the ground lease to someone who meets the 80% area median income limit criteria. This helps make new construction homes available to buyers who would otherwise never be able to afford to purchase in this neighborhood, while ensuring that the building will remain affordable in a neighborhood where prices are escalating at a rapid pace,” Perry added.

Perry, who was involved several years ago in PAR’s Community Reinvestment Project, or CORE, said it was his involvement in CORE that introduced him to influencers on this project. CORE was designed to identify government-owned properties and create workforce housing across the commonwealth.

Dave Lombardo, a Realtor® with Perry’s Century 21 Advantage Gold, works with several affordable housing programs in the city.

“We’re seeing areas throughout Philadelphia where people are being displaced from neighborhoods because home prices have outpaced their means,” Lombardo said. “This is an attempt to keep some of the people who grew up in a neighborhood there. As some neighborhoods are revitalized, people raised in the area aren’t able to remain part of their communities.”

“The nice part about this program is everyone wins,” Lombardo said. “For the homeowner who owns a more expensive property nearby, they’ll see an increased value when they go to resell because these properties were thoughtfully designed and developed. And this project will create a chain of affordability going forward for many years.”

Lombardo has seen a steady stream of interest in the housing and is working with people to qualify to purchase a property.

“Philadelphia is becoming more and more expensive, which is a problem for many of those from Philadelphia,” he said. “When I started in real estate, I would often sell market rate properties for $100,000 to $150,000. There’s nothing left at that price unless it really needs some work and we’re starting to see that across many neighborhoods.”

Perry said, “This opportunity isn’t for everyone. The ground leases have obligations and restrictions that come with owning a home here. But this is an excellent opportunity for others who welcome these provisions in exchange for owning a beautiful, new home at an affordable price in a neighborhood where that typically does not occur. I’m excited that there is a community of Realtors® who are opening their minds to these types of opportunities for their buyer clients. As the listing broker, there were times when buyers who wanted to purchase a home in an affordable housing program felt compelled to contact us when other agents weren’t willing to learn how to work with the properties. It’s great to watch our industry evolve. Today Realtors® in our marketplace are promoting these opportunities better than ever.”