A Way Home — Housing Solutions: This story is part of Southwest Michigan Second Wave's series on solutions to homelessness and ways to increase affordable housing. It is made possible by a coalition of funders including the City of Kalamazoo, Kalamazoo County, the ENNA Foundation, Kalamazoo County Land Bank, and LISC.

"We would be very bad at being a for-profit developer," says Kalamazoo Habitat for Humanity's executive director. But Rob Oakleaf adds, "It always amazes me that we're able to make homeownership truly affordable and the way that we do that is by losing money." That's because the nonprofit usually sells the home it builds for much less than the cost of building them. 

That formula has allowed it to build 200 houses in Kalamazoo over the last four decades. They include four that are in the process of being finished in the Eastside neighborhood. 

Construction began before the rise of COVID-19, but Oakleaf says progress slowed to a crawl during the pandemic. Now he says the projects are back on track with four families moving in later this year. Habitat got $170,000 from Kalamazoo County's housing millage for the four houses. Kalamazoo Habitat spokeswoman Margy Belchek says the millage is among several sources of money the agency draws on to create more affordable housing.

"One great thing working with the county compared to other government funding is that Kalamazoo is still a small area," Belchek says. "We literally know the people that were working with at the county, and same with the city. I hope that this can be a thing that we look at every year."

Habitat for Humanity Executive Director Rob Oakleaf and Margy Belchak.Rob Oakleaf says funding from the millage, along with grants from area foundations and individual donors, helps close the gap between what it costs to build a home and the amount the buyers pay. That gap has widened a lot as the price of construction materials soared during the pandemic. Oakleaf says Habitat also gets revenue from the mortgages it writes for the families that move in. But the recent jump in inflation and the Prime Rate affecting commercial home loans is not a problem.

"Since we finance the loans, we're not actually subject to those interest rates," Oakleaf says. "Legally, we have to charge some interest and so our standard rate is 0.25 percent. It's absolutely negligible. That's one of those ways in which we lose money over time because with inflation, we don't see the return of that investment. But that's one of the ways that we make it affordable for our homeowner partners."

Those partners are chosen through an application process early each year. Kalamazoo Habitat for Humanity often gets several hundred inquiries from people looking for a home they can afford. But the number it can accept is limited by the nonprofit's resources. 

Construction underway at 625 Gayle in Kalamazoo's Eastside neighborhood. Oakleaf says Habitat works with individuals and families who will be successful in the long-run. He says a typical buyer is someone who is at 30 to 60 percent of the average area median income. Most commercial developers won't accept anyone below 80 percent.Then again, Habitat does not take on people at the other extreme.

Oakleaf says, "One misconception is that we take homeless people and put them in homes. That's not what we do. The folks that we're working with have to have income and have to be ready to take that final jump. It's taken us 40 years to build 200 houses. But that's still a pretty profound impact, especially in investing in the core neighborhoods of Kalamazoo."

Oakleaf says Habitat's buyers, who are required to participate in the construction of their new homes, are in the group known as ALICE — asset limited, income constrained, employed. Despite their financial challenges, they are able to take on a 30-year mortgage commitment and to maintain their homes.

Habitat for Humanity in Kalamazoo has a certain style of house that Oakleaf describes as "modest." He says, "We typically build one story that's fully accessible, so making sure that there aren't steps or tripping hazards, or anything like that. Our average house is going to be three bedrooms with 1,000 to 1,200 square feet, and our motto is to 'build better than code.'"

Construction underway at 625 Gayle in Kalamazoo's Eastside neighborhood. The homes are built on vacant lots, mostly obtained at very low cost through the Kalamazoo County Land Bank.

Oakleaf joined Kalamazoo Habitat for Humanity during the pandemic after previously serving with another non-profit human service agency, Ministry With Community. He hopes Habitat can get back to closing on eight-to-ten home projects each year, as it once did early on. But Oakleaf says numbers don't tell the whole story. 

"I'm less concerned about the sheer number," he says. "It's about the success of the homeowner partner. So, if we only build one house in a year but we are super-confident that that family is going to be really successful in that house, hopefully for generations, that's the objective."

It's estimated that Kalamazoo County is at least 6,000 units short of the affordable housing its residents need. The four new houses being built on Kalamazoo's Eastside might seem almost negligible compared to that demand, a point Oakleaf concedes. "When you say, 'OK, we hope to close on five houses in the next year, and there are 6,000 units needed, that does seem small. But in the lives of the people who are affected, it is transformative." 

A shed on the site of a new home being built by Habitat for Humanity at 625 E. Gayle. Oakleaf adds that the families Habitat helps to homeownership are much less likely to wind up among the unhoused later on. And he says there's the matter of equity in housing.

"Home ownership is the way that Americans have built wealth, traditionally, and those opportunities have been denied historically in unjust ways to specific populations, especially populations of color. And for so many families, it's also that final push beyond living a life of poverty or scarcity. So, it can really be that transition from living on a razor's edge to having some security."

Photos by Taylor Scamehorn. See more of her work here.

Tree Fellers on site of a new home going up at 625 Gayle in Kalamazoo.