People

Tiny Homes May Hold Key to Breaking Poverty Cycle

September 20, 2016Posted by Wendy Joan Biddlecombe

For the formerly homeless and those living at or below the poverty line, qualifying for a mortgage and becoming a homeowner is more of a dream than a reality.

A social movement known as the “tiny house trend,” which offers people smaller but more efficient space with a reduced carbon footprint, has made the dream a reality for some; for other who make between $10,000 to $15,000 a year that may not qualify for Habitat for Humanity homes or their own mortgage, the price tags are still out of reach.

Fortunately, cities such as Portland, Oregon; Austin, Texas; Madison, Wisconsin; Seattle, Washington, and Ithaca, New York have built tiny house communities for people who are homeless or qualify as low-income households.

Dignity Village in Portland has used tiny houses to shelter 60 people a night since 2001, and claims to be the oldest city-supported community housing program.  And, in Detroit—a city with an abundance of abandoned buildings and vacant lots—one nonprofit is offering people who might not otherwise be able to find a stable, better life for their family a way to rent their way to homeownership.

“We saw that we could build these houses relatively inexpensively and people could operate with very small bills,” said Rev. Faith Fowler, executive director of Cass Community Social Services, which provides, food, housing, job programs and healthcare to people in Detroit.

Renters will pay $300 a month plus electricity, which is expected to be a maximum of $35 a month. After three years, residents become eligible for a rent-to-own agreement that can make them homeowners after a total of seven years in the house. The first 300 square foot house was completed in September and six more houses are set to be be built by the end of October, with the first seven renters set to be moving in just in time for Thanksgiving.

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The area where the homes are built is in a neighborhood of northwest Detroit that doesn’t have its own name. There are about 300 vacant lots within 1 mile, but there is also a job corps facility, repertory theater, and other community organizations that will support the tiny house community.

Applications for the home open up in October, and Fowler said the nonprofit plans to select a “diverse” group of seniors, college students and formerly homeless people for the neighborhood.

Detroit has a history of people owning individual homes, family homes, and that has changed over time with the exodus of folks from the city,” Fowler said. “We’re hoping to reinvigorate this and create the type of housing for upward mobility that hasn’t been an option for people without any assets.”

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Krystal Hull, a Cass intern who is studying urban development at the University of Michigan—Dearborn, said she’s excited by the project because “We’ve reached this point where big, big, big is not necessarily the best.”

“It’s basically impossible to get a mortgage on a home for less than $100,000 and not everyone has those means,” said Hull, who serves as warehouse manager on the construction site, keeping an inventory of donated items and coordinating with the contractors. Hull said that what seem like a small amount of tile might be enough to complete a tiny house’s bathroom.

Aaron Long of the Low Income Housing Institute in Seattle said the organization started using rudimentary tiny houses for transitional housing about three years ago when a tent city called Nickelsville needed to vacate the city land they were living on.

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“They had some trouble locating a place to move to, and Low Income Housing Institute had a property that was slated for development but the groundbreaking was still a year off, so we offered that property for the camp to move to,” Long said, adding they partnered with a local Home Depot to build tiny houses. The nonprofit now helps operate five tent villages in the Seattle area.

Long said there is no average stay in the tiny houses and that his organized moved 40 people from the tiny houses to permanent houses in 2015.

“They had some trouble locating a place to move to and Low Income Housing Institute had a property that was slated for development but the groundbreaking was still a year off, so we offered that property for the camp to move to,” Long said, adding they partnered with a local Home Depot to build tiny houses. The nonprofit now helps operate five tent villages in the Seattle area.

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Long said there is no average stay in the tiny houses and that his organized moved 40 people from the tiny houses to permanent houses in 2015.

“It’s a big upgrade from the tents,” Long said of the tiny houses. “We’ve been able to insulate them and wire them with electricity. And unlike an unauthorized encampment, you can leave your stuff at your house and go to a job and not have to worry.”

“Rent-to-own can be a great way to buy a home, for renters who otherwise may not qualify for a mortgage. But like any contract involving large assets, it’s extremely important for all parties to fully understand what they’re committing to,” said Brian Davis, a real estate investor with Spark Rental.

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Like with any agreement, there is some fine print, and it’s important for those considering rent-to-own programs to understand what happens if they don’t buy their home within a certain timeframe and if the landlord could report their incomes to credit agencies.

And, Davis said, renters should know what they might lose in terms of perks if their rent is not paid on time or if they come up short on another requirement.

Still, these tiny homes are a giant step in the right direction when it comes to helping people who are working hard to create a better life.

Here’s hoping that this trend-within-a-trend continues to build a solid foundation.

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