Baltimore's Dollar Homes

[sheclown]

Baltimore Housing Overstock

It is time to act
History of the Dollar Home in Baltimore
April 29, 2009

I recently had the opportunity to sit down with Robert Embry, currently president of the Abell Foundation and formerly Commissioner of the Baltimore City Department of Housing and Community Development. Mr. Embry managed the dollar house program that the city ran in the early 1980s, and was kind enough to provide some historical insight into the program’s origins and mechanisms.

The program was created in response to a rather unique set of circumstances. The City had purchased a number of houses in order to demolish them for the construction of interstate I-170, a strip of connector highway intended to link I-70 to I-95. Neighborhoods on the western edge of downtown, such as Barre Circle, Otterbein and Ridgely’s Delight were where the city had concentrated property holdings. Due to public opposition to the I-170 construction plan, the project was terminated, though not before the current expressway section of US-40/Franklin St. was completed. The City suddenly found itself as a large residential property owner in some marginal neighborhoods, and formulated the dollar house program to handle the change in situation.

The program had four key points that contributed to its success.

    Truly low barrier to homeownership. Resident homeowners are the lifeblood of a city. Converting renters to homeowners, or attracting new resident homeowners from other locations maintains the vitality of a place. Investing in where you live is a heavy incentive to increase your involvement in community life.
    Clustered properties. Since the City had purchased whole blocks of properties, it was possible to quickly improve large parts of a neighborhood. When an entire block of homes is renovated simultaneously, residents can see progress on a large scale being made daily, and the investment in homeownership creates financial rewards immediately.
    Direct loans from the city. Of course, renovating a home costs more than a dollar. Since the city was selling the homes for $1, a prospective buyer didn’t need to come to closing with thousands of dollars in collateral to get an 80% mortgage on the property. However, there weren’t any banks that would finance the renovation loans under those circumstances. To provide the capital for renovation, the City issued bonds and loaned the resulting money to the new homeowners at + 1%. Over the course of the program, not a single homeowner defaulted on a loan, and the city turned a handsome profit on loan interest. Read that sentence one more time.
    A dedicated office. A dedicated advisory office was established to help guide the homeowners through the renovation process, as many had not been through it before. The office helped the homeowners connect with architects and reliable, licensed contractors, and provided a general resource for information and support.

Mr. Embry considered the program to be an unmitigated success, and if you take a stroll through any of the neighborhoods I mentioned, you’ll find them to be some of the most charming places in Baltimore.  Consider that the City treasury grew through running this program, and it certainly seems like a win-win-win for the city government, the new resident homeowners and the city-at-large.

Time has not stood still over the past 30 years, and circumstances are different now than they were then, but the keys illustrated above can guide us to a new vision, a new strategy and new tactics to address the issues of today.

Please feel free to continue the discussion in the comments. If you have any questions or would like clarifications, I’m sure Mr. Embry would be happy to answer what he can. Many thanks to him for his time!

Joe and I have spent some time in Fell's Point (Baltimore).  We attended a street festival that started when the expressway was aimed at their neighborhood. 

The neighborhood got together and raised legal funds through the street festival.  Decades later, the neighborhood is fully intact (and really cool, vibrant, diverse, and a bit funky) and the street festival continues.

Thanks Janet for this link.  This sort of program is EXACTLY what Springfield needs.

[finehoe]

I'm not sure Fells Point was ever in on the dollar houses.  It was mainly Otterbein, and later (I think) Federal Hill.

Not that it wouldn't be a great idea for Springfield.

[sheclown]

Baltimore is a great example. While I was growing up in Northern Virginia, Baltimore was a scary place. Now it is really a wonderful downtown

Not sure about fells point but they did fight the overpass and won. 

[acme54321]

Baltimore is still scary

[sheclown]

The city sent a group of officials, including Jason Teal from OGC and code enforcement, to Baltimore five years ago to research how they handled their auctions.

[iloveionia]

What more can you tell us Sheclown?  Would this be a good model for Springfield?

[InnerCityPressure]

Baltimore is still scary

No doubt.  If you still have $1 after you are mugged, then you can buy a house.

[sheclown]

I don't know.  I do know that Jacksonville looked to Baltimore (apparently the auction was successful and they held it for many years).  Eventually, it was expanded to include commercial properties. 

When Jacksonville looked at it, Baltimore didn't take possession of the houses, but rather "receivership" and held them.  Then the properties were auctioned for the minimum amount of city fines against the house.  If no one bid on the house, it returned to the owner.  If it did sell, the new owners had a specified amount of time to restore their property.

A quadruple  win. 

1.) The city got its fines paid.

2.) The neighborhood saved a house and got a new set of "urban pioneers"

3.) The delinquent homeowners got out from under liens and fines.

4.) A new homeowner got a bargain house.