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Donations take the hit as housing prices rise

Tthe soaring prices that have made housing affordability a growing concern throughout the Washignton D.C. region have claimed another casualty: generosity.
Amanda Phillips, left, Habitat site supervisor, and Shelly Morrison, Manager of the Cardozo Construction and Design Academy, in red hat, direct student-volunteer workers as they install sheetrock in a new Habitat property off of Blaine Street, in Washington D.C.
Amanda Phillips, left, Habitat site supervisor, and Shelly Morrison, Manager of the Cardozo Construction and Design Academy, in red hat, direct student-volunteer workers as they install sheetrock in a new Habitat property off of Blaine Street, in Washington D.C.Lois Raimondo / The Washington Post
/ Source: a href="http://www.washingtonpost.com/wp-srv/front.htm" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

Charlene McCall, who has spent years building houses for the poor, has never had to worry about buying land.

But the soaring prices that have made housing affordability a growing concern throughout the region have claimed another casualty: generosity.

"We can't get people to donate land anymore," said McCall, board president of Habitat for Humanity's Prince George's County chapter.

Last month, her organization bought its first land parcel after building on the last of the lots donated to it over the years. "They offer it to us and a month later we find out they sold it. It happens all the time. And you can't blame them for that -- they're making money."

Over the past five years, home prices in much of the region doubled and neighborhoods that had long been ignored became fashionable. Nonprofits such as Habitat that had long served those communities found themselves competing with speculators and developers for properties that once might have been given away.

Never mind the cooling housing market. From District-based Mi Casa Inc., which builds about a half-dozen houses every year and redevelops small multifamily buildings, to the Community Preservation and Development Corp., a regional developer of big multifamily complexes, local nonprofits are confronting the realities of a changed housing market.

No place is cheap
"We used to call ourselves the buyers of last resort," said George Rothman, president and chief executive of Manna Inc., a 24-year-old organization that builds and develops affordable housing in the District. "We would buy properties nobody wanted. But now it doesn't matter what part of the city you're looking at. There are investors, speculators, corporations."

The housing boom has also claimed existing affordable housing around the region, as building owners found it a lot more profitable to turn buildings into luxury condos than to rent to moderate-income families or those who qualified for government-subsidized Section 8 housing.

The issues extend beyond the scarcity of cheap land. Groups say they have seen declines in donated construction materials as their costs rise. With so much building going on, finding plumbers and electricians to work alongside volunteers is difficult, said Carol Casperson, who heads the D.C. chapter of Habitat for Humanity.

When her group started a 53-home project on a 4.3-acre lot in Northeast Washington in 2002, contractors would call and ask for work, Casperson recalled recently as she drove around the area, now dotted with construction cranes. "They'd say, 'I heard you were building,' " Casperson said. "Now, we have to beg people to come out and give us a bid."

She said her group was fortunate to get the land from the D.C. Housing Authority before the housing boom really took off. "This will work for another year or two," she said.

Various ways to cope
The nonprofits are dealing with the situation in various ways.

Rather than trying to buy houses directly from owners, Fernando Lemos, Mi Casa's founder and executive director, focuses on getting property through the U.S. Department of Housing and Urban Development and the District's Home Again program, which takes control of vacant, deteriorated parcels and sells them to developers. The city program requires that a third of the redeveloped homes be sold to low- and moderate-income households.

To keep costs down, Lemos and his staff also began building market-rate houses to offset costs in the houses it sells to families of lesser means. For example, the group was recently able to sell a $160,000 two-bedroom unit in Southeast Washington for $100,000, thanks to a home it sold in Northwest for a profit. "It's a challenging situation right now," Lemos said.

In Northern Virginia, construction of affordable homes by the local Habitat for Humanity chapter nearly stopped four years ago when its pipeline of land dried up, said Karen Cleveland, executive director. After developing 18 homes in 2003, the group was able to build only one house the following year, two in 2005 and two this year.

The nonprofit aggressively raised money, Cleveland said, reaching out to individuals and businesses, hosting breakfasts and setting up an endowment fund for land acquisition. It teamed with larger builders to develop the affordable portion of larger developments. And instead of sticking to the traditional Habitat model home -- single-family house with three bedrooms and one bath -- the group began to shift its focus to multifamily units.

The group just broke ground on its first condominium project, in Fairfax County, and is working with Arlington County to convert an apartment building into a three-story, 12-unit condo, Cleveland said. "We need to continue to try new ways, be creative," she said.

Meanwhile, J. Michael Pitchford, president and chief executive of Community Preservation and Development Corp., stands ready to pounce at the first signs of a softening market. His group was recently outbid on a 391-unit apartment rental building in Annandale by a for-profit developer. But with condo prices flattening, Pitchford is hoping some developers will abandon their projects as their profit margins tighten.

"The condo market has shifted. The investors are out," he said, adding, "A good old-fashioned real estate recession will be helpful."