Think Out Loud

Portland’s Habitat for Humanity aims to scale up affordable housing efforts

By Elizabeth Castillo (OPB)
Jan. 5, 2023 6:13 p.m. Updated: Jan. 5, 2023 9:37 p.m.

Broadcast: Thursday, Jan. 5

In Portland, Habitat for Humanity strives to boost affordable housing.

In Portland, Habitat for Humanity strives to boost affordable housing.

Kristyna Wentz-Graff / OPB


In Portland, Habitat for Humanity is striving to have a greater regional impact. As the housing crisis continues to affect Oregon, the organization wants more resources directed toward helping low income families become homeowners. Infrastructure exists to expand affordable rental housing, but not to help low income people reach home ownership. We learn more about what the organization hopes to see and accomplish in the future from Steve Messinetti, the president and CEO of Habitat for Humanity Portland Region.

Note: The following transcript was created by a computer and edited by a volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. The Portland City Council first declared a housing emergency because of homelessness and a lack of affordable housing back in 2015. This situation has only gotten worse, a lot worse since then. We’re going to start off today by hearing how one prominent nonprofit is responding and is expanding its mission. Steve Messinetti is president and CEO of Habitat for Humanity in the Portland Region. Welcome back to Think Out Loud.

Steve Messinetti: Great, thanks Dave, thrilled to be here.

Miller: What does it mean to call this a crisis?

Messinetti: I think we’ve had a lack of housing in our city for probably generations. But really since the great recession, when everyone stopped building for a while, that really caught up with us and the housing crisis is really all about the lack of housing, the lack of enough housing for the people who are here and the people who continue to come here.

Miller: What does that mean in terms of mortgage payments and rent payments and the amount of money that the average people have to spend?

Messinetti: So obviously, if you’ve owned a home for a long time, it has less of an impact on you because you’ve got a mortgage and that’s pretty set. If you’re a renter, you’re in a much worse situation because the price of homes makes it difficult for people to buy up into homes. So that means more people are renters, which puts more pressure on the rental market, which increases the cost of rent.

Miller: Right now is the average rent higher than the average mortgage?

Messinetti: Oh, by far. I think about my own personal situation. I moved here 19 years ago, and purchased a home. If I were to pay rent now, I’d be paying more than double what I pay in my mortgage payment for the same house.

Miller: So that’s before we get to what’s happened much more recently with the rise in interest rates, which has even changed the calculus for people who would hope to buy a home right now. How much has that impacted the price of home ownership?

Messinetti: Oh, it has a huge impact. For every 1% that interest rates go up, for the entry level buyer, that probably decreased their buying power by about $50,000. So it has a huge implication on what folks can afford, especially folks who are just trying to get into the market and just might be able to afford it and then all of a sudden they’re knocked out again.

Miller: This is the current market context. Can you remind us of the basic and long standing model that Habitat for Humanity has used in terms of building homes and selling homes?

Messinetti: So Habitat for Humanity here in the Portland region, we’ve been providing first time homeownership opportunities to families who have very low paying jobs for over 40 years. We do this by mobilizing the community, volunteers, local businesses, faith organizations, to help build high quality, energy efficient homes. And then we also work with families and select families, helping them to get an affordable mortgage and helping them to get the down payment assistance needed to make that mortgage realistic for them and their income.

Miller: And the idea is it can also be passed on. It can be permanently affordable to somebody who might buy that home after them. How does that work?

Messinetti: Yeah, that’s right. So we work in partnership with Proud Ground, our local Community Land Trust now, so that all of our homes are permanently affordable, meaning that it’s not just a home that’s affordable to the first buyer, but when they choose to sell in the future, if they choose to sell, the resale of that home will also be affordable to a family under a certain income. So there’s a resale formula that kind of shares in the equity, so that the original buyer gets a fair share of that equity and some of that stays in the home, or really stays with the community, to keep affordable housing in neighborhoods in perpetuity.

Miller: Historically, or going back to say 10 or 15 years, how many homes have you been able to build and help people buy in any given year?

Messinetti: Up until recent years, we were building somewhere between 25 and 30 homes a year, in different communities throughout the region. And in recent years, we’ve mostly been building 10 or 20 homes at a time in a location. We’ve grown that significantly over the past couple of years. This year we have over 100 homes under construction right now, from Gresham, all throughout Portland, Beaverton, Hillsboro, even Lake Oswego, with regard to homes that are either under construction or in pre-development.

Miller: But for each home that you might build, or unit that you might build, how many applications might you get?

Messinetti: We just completed a selection of families for about 40 homes that we’re about to start building. We had over 1,200 applications initially. That got narrowed down to a few 100 that fully qualified and now it’s more of a lottery system in terms of actually starting to go through that list, so way more than we could ever meet.

Miller: Has that ratio grown over the years? I mean, have you seen an increase in demand as housing affordability has become a vanishingly small possibility?

Messinetti: Yeah, I’d say we’ve seen two and threefold increases, ever since the recession. So we’ve seen that increase and increase again, more and more people who have been wanting to get out of rental and buy their first home. And it’s getting further and further out of reach and their rents are now becoming a huge part of their income, right? We now have a much higher rate of families who are paying more than 50% of their income on rent. So they’re desperate to get into an affordable place to live.

Miller: So how have you thought about that, just personally? I mean, I imagine for every family that’s able to get in one of the homes you build, it is a transformative experience and it could lead to generational wealth or generational differences in their lives. At the same time, it’s just one family with more and more people who probably don’t have access to that. How do you think about those two at the same time?

Messinetti: Yeah, that’s the constant struggle. Part of that led us to that move to having all of our homes be permanently affordable. That wasn’t always the case for Habitat. Just five or six years ago we made that shift, like many urban areas that have seen growth in sales prices like we have here. So that every home we build, we know will always be affordable in that neighborhood and will serve families in the future as well. But it’s also why our board and staff continues to look at ways that we can evolve and innovate so that it’s not just another 10 or 20 families we can serve, but how we can really influence the market to start to meet the need.

Miller: So what else are you doing? How has your model evolved in recent years?


Messinetti: So, as I said for right now, we’re still working kind of in our traditional model, where we are the builder, we’re the general contractor. Our staff are out building houses with volunteers doing a lot of the work. We partner with banks, but for the most part, we do it all for every family. And the transition we’re looking to make, starting this year with some pilot projects and then expanding upon, is looking at ways we can bring other nonprofits, other for profit developers into the fold where they’re the ones building the houses. They’re good at that, too, and we’re just working with the families and helping them get their mortgage, get their down payment, qualify and buy that house.

Miller: What exactly would this add, the model you’ve just described or the evolution of your model, what would that let you do?

Messinetti: It’s not so much what it would let Habitat do, it needs to be more than just Habitat that’s building for-sale housing. If you think about the affordable rental market here, we actually have a really strong infrastructure. We have dozens of nonprofits and even for profit developers who specialize in building affordable rental housing. We have banks that specialize in financing that rental housing. We have state and local governments that have programs that are consistent, that we can count on every year. None of that exists on the for-sale side. On the for-sale side, there’s Habitat, there’s a few other organizations that have tried to do some for-sale product development, but it really doesn’t exist. Our hope is to create that infrastructure.

Miller: Why? What is special about for-sale housing? I mean, home ownership as opposed to rental assistance? They’re both ways to get people into homes.

Messinetti: Yeah. I think the most significant difference is that once a family, especially a family that has low income, can buy a home, they’re set independently, in terms of no no longer needing support with their housing in the future. They have a house payment that they can count on. It’s not going to increase, they’re not going to have to move again and again. Kids benefit because they’re not so mobile. So they benefit from that stability and do better in school. Families, we see over and over again, especially single parents, move in and they’re able to do better at work and be better parents as a result, because they’re not constantly chasing the next place they have to live. So the benefits are way beyond what we think of in terms of a wealth building opportunity, it’s stability that it really provides folks.

Miller: Policy-wise, why do you think it is that from the public sector, there hasn’t been more of a focus on what you’re talking about?

Messinetti: You need to be thinking long term to be thinking about investments in home ownership. And with the crisis, a lot of the funds we have, we have a tremendous amount of public subsidy that’s going to housing right now. A lot of it’s going to rent subsidies and things that are just emergency situations, helping people stay in the homes they are already in, which is important. So because we continue to have fewer and fewer houses on the market and the lack of housing, we’re having to be in this emergency mode rather than a kind of more strategic mode of providing the housing that our community needs.

Miller: Am I right that another effort that you’re working on is keeping people in their homes? What does that entail?

Messinetti: That’s right. So we have what we call our Critical Home Repair Program. We will do about 50 to 60 homes this year where we select families that have low incomes but own their house, but they can’t do a critical repair that they need in order to stay in their house. Many times that’s replacing their roof, they can’t replace their roof, they can’t afford that. It’s leaking. Insurance companies may have even sent them a letter saying “replace your roof or we’re going to cancel your insurance,” which will be an issue for their mortgage. So we’re able to come in and do a significant repair. That gives that family the ability to stay, often seniors, and it gives that house a new life in terms of longevity as well.

Miller: In March of this past year, in the spring, you received an eight plus million dollar donation from Mackenzie Scott. Can you put that in context? What did that mean in terms of your, your regular annual budget?

Messinetti: Yeah. So, I was definitely blown away when I got that call. Didn’t believe it at first. . .

Miller: Wait, so someone just called you up and said, “We’re going to give you $8 million?”

Messinetti: Pretty much, a lot of questions for them. We raised between $4 million and $5 million a year, fundraising-wise, so that’s more than almost double what we would typically raise in a year. So really transformational for us. And so much of this work relies on capital and access to capital to build homes, families accessing capital to get mortgages. So that’s why that’s a significant investment that we’ll be able to leverage and really significantly more families with.

Miller: It’s a great problem to have, to get way more money as a nonprofit than you had before, but like a lot of state and local governments during the pandemic that got a huge infusion of federal money, you had to make decisions about what to do with what was probably going to be a huge one time infusion. How did you think about the best way to use money that you probably weren’t going to get again, at least to that extent?

Messinetti: In fact, we’ve used those funds this year, as kind of self-financing of projects. We’re building more homes than we ever did as a result of it. But we’ll be able to pay ourselves back when we sell those homes, in this case, and are looking at ways to use that as seed money and inviting other investors into that in order to grow that pot of money, as a revolving loan fund for the development of more and more houses.

Miller: As you described earlier, one of your mission changes is to try to get other folks from the private sector, especially to do the kind of work that you’ve been doing. But even so, we’re talking about a huge nationwide housing market that has pieces everywhere and it has investors everywhere, in that sense almost a global investor market where real estate is one other way people can make money. It’s a complicated world of real estate. I’m curious what you’d like to see from the public sector, in Portland in particular, or in Oregon in terms of housing? What levers do you think people in the public sector could pull or push to make the biggest difference?

Messinetti: I think there’s two components or two categories. One is on the financing side, so subsidy, because we’re at a point where no one can buy a house with a low income, pretty much no one who’s renting without some subsidy towards the down payment. Having consistent sources of that subsidy, we’ve seen some good funds committed in those areas, but they’ve often been one time, so you can go to them, but you can’t plan on them for the future. So creating sources of funds that can be dedicated to helping people buy homes throughout the state that we know are going to be there year after year.

Miller: So maybe in addition to Section 8 vouchers, there’d be some kind of subsidy program for low income people if they meet certain characteristics, to be able to get help for a down payment?

Messinetti: That’s correct, yes. And that exists already. Oregon Housing at the state level has programs, the city of Portland has programs, they’re just not consistent, so they get this pot of money, it goes out and then you wait and see if there’s going to be another one in a few years. So having a consistent source of that type of subsidy. On the other side, it’s more of the permitting and fees side of things. And zoning. How do we incentivize and speed up the process? And those incentives are going to be key if we’re trying to get the market to come to the table and help as well.

Miller: This is something that city leaders and various commissioners of the various bureaus in Portland all have some kind of finger in this complicated building pie. They’ve been talking about this for years. Have you seen any recent evidence that something is going to change to make it easier for people to build good quality homes in Portland?

Messinetti: I think, yes, it has been talked about for years and everyone who has come in has had big ideas and we haven’t seen a lot change. I think the conversations and the progress we’re seeing right now is different, both with the change in the style of government that’s about to come, but also in terms of the commitments that Commissioner Ryan and others have made to really bring the bureaus together. A lot of the problems have to do with the bureaus all being their own entities that have their own rules and they don’t always work well together.

Miller: With planning, sustainability or development services. So that gives you the biggest hope that the change in government could lead to a streamlined approach to zoning and codes?

Messinetti: That’s right. But it’s more than just the pace of things, right? And Portland does a great job at waving our system development charges and there’s a tax abatement that families can get in Portland, which we don’t see in most of the other jurisdictions. So we really need some of those other jurisdictions to get on board as well with incentivizing, because this is a regional issue, it’s not just a Portland issue. Some of those fees often are higher than what it costs to buy land, in many places.

Miller: Finally, I’m curious what work you at Habitat are doing specifically for marginalized communities, members of marginalized communities who have been disproportionately left out of home ownership in this country?

Messinetti:  We’ve been, for years, able to have 80-90% of the homes we build sold to families of color. And that’s just through our outreach and just through the realities of the target audience we have, that are at a certain income is the majority of People of Color. What we have seen in recent years though, is the decline in the number of what we call foundational Black households, descendants of slaves, that have been coming to us and qualifying for mortgages. So we’re launching what we’re calling a ‘Black Home Ownership Initiative.’ It’s actually part of a national initiative, really looking at the barriers that these foundational Black households are facing and ways to remove those barriers. And often it’s looking at, in many cases, those culturally specific programs, ways of getting ready to buy homes, and even just where we build has a big difference.

Miller: Steve Messinetti, thanks very much.

Messinetti: Thank you.

Miller: Steve Messinetti is the president and CEO of Habitat for Humanity for the Portland region.

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