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This US city is selling vacant homes for $1 each, but here's the catch

An American city is planning to sell hundreds of homes for $1 each, but buyers have to promise something before they're approved.
This US city is selling vacant homes for $1 each, but here's the catch
Posted at 7:12 PM, Mar 27, 2024

Buying a house for a buck sounds too good to be true. Well, that's because it is.

"The reality is you probably need closer to $150,000 to $200,000 to renovate one of these structures," said Dwanda Farmer, community economic development expert and CEO of the CED Doctor in Baltimore.

That's why Baltimore's Department of Housing and Community Development (DHCD) is requiring applicants to its newly approved Fixed Pricing Program to provide proof they can spend at least $90,000 to renovate a home — after purchasing it for just a dollar.

The goal is to rehab some of the city's thousands of vacant homes. The application link is now live; the department will begin reviewing applications on April 1.

Developers can purchase for $3,000, and nonprofits for $1,000. Individual buyers can purchase for $1, but they must live in the home for five years.

But affordable housing advocates Nneka Nnamdi, executive director of the SOS Fund, and Farmer say the program doesn't serve the people who need it most. 

"Baltimore City has provided developer incentives over the last three decades that developers have responded to the needs of this community 80% [AMI or Area Median Income] and above," Farmer said. "What I'm asking the mayor to do is to restrict any future public investment to where we most need those - which is 50% and 30% [AMI]. Right now, Baltimore City has 38 units for every 100 needed for 30% and below and 58 units for every 100 units needed for 50% and below. But we are saturated at 80%."

They're concerned about displacing longtime residents through gentrification, and they pointed to the 1970s-era "dollar home" program as a cautionary tale. 

The city then offered buyers federally funded loans to help with renovations — funding the city doesn't have to offer this time. Formerly blighted properties, they're now redeveloped and home to higher-income residents and renters.

SEE MORE: Renting will be cheaper than buying a home for years, report finds

"That is the exact type of anecdote that we don't want to see spreading into Harlem Park, into Poppleton, into Middle East," Nnamdi said. "We want the people who have been the backbone of the city, who have paid disproportionately high property taxes, who have dealt with horrible city services to actually be able to live freely and to live well in a city that their labor and their intellectual property built."

"I understand that they have a goal of driving middle-income families into the city, but middle-income families don't want a dilapidated house even for a dollar unless there's a real plan that's going to do whole-block redevelopment," Farmer said.

Applicants will also be subject to a vetting process. The city will check their criminal history, as well as whether they have any open liens or judgments. 

According to the program's website, the department will also "assess whether applicants own vacant building inventory older than two years or less than two years without a recent open/active permit. This helps us gauge their experience and readiness for rehabilitation projects."

The advocates Scripps News Baltimore spoke to hope that's enough to weed out potential bad actors.

"One of my main concerns is that this will become a payday, open season for the same slumlords and speculators who have been keeping properties in poor condition and charging high rents in the city for years," Nnamdi said.

In another effort to prevent that, the first 90 days of the program have been set aside strictly for buyers who plan to use the home as their primary residence. DHCD says it's already received more than 800 inquiries from such buyers, but there are only under 300 homes set aside for the program right now. 

The department told Scripps News Baltimore "the property listing will be fluid and be constantly updated."

"For the average working person, 90 days isn't necessarily enough time; people may not have even heard about the program for the first 90 days, so a 90-day window gives some time, but it's not adequate," Nnamdi said. "Beyond that, people need technical assistance, and they need funding. One of the main problems is many of these houses may have been vacant for 10, 20, 30 years. So it'll cost a significant amount of money, anywhere from $50 to 150,000 in order to repair them. So to sell me a house for a dollar is one thing, but to not support the development in order to bring that house back into productive use isn't equity."

The plan was approved at the city's Board of Estimates meeting Wednesday after both Farmer and Nnamdi asked for changes.

City Council President Nick Mosby echoed them, saying he was "deeply concerned" by this "bad policy."

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Housing Commissioner Alice Kennedy said the department plans to ensure there are guard rails in place to prevent displacement down the road.

Mayor Scott said, "I already instructed DHCD to develop an anti-displacement and equity-based framework based on community input that will guide their work about the policy decisions, develop a public-facing tool to track progress towards those whole-block outcomes, update our vacants website to clarify to the public how they will create affordable housing at scale, provide quarterly reports to the City Council, including the demographic of buyers, and provide an annual review of the effectiveness of the Fixed Pricing policy, specifically as it relates to the speed of disposition alignment with those whole-block outcomes, and evaluation of the success of the program as it relates to use and occupancy."

In a statement to Scripps News Baltimore, a spokesperson for DHCD said: "We are heartened by the broad-based agreement that our fixed pricing model is a welcomed approach that will effectively streamline city property dispositions. This is important forward movement that will greatly assist in our ongoing efforts to successfully address vacant and abandoned properties in Baltimore City. We also want to underscore that during the initial roll-out phase of the program, we are focused on providing first purchasing rights for those applicants that intend to make a BuyIntoBmore property their primary residence. We are already tracking significant interest in this regard and will prioritize those applications for phase one of the program."

This story was originally published by Elizabeth Worthington at Scripps News Baltimore.

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