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Urban homesteading makes dream homes a reality

It's not exactly what Ronald Reagan would call a safety net.

In fact, many observers might argue that it is giving a leg up to those families who are already doing quite well on their own. But ask any of the folks participating in Chicago's latest housing program, and you'll get an entirely different perspective.

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Ask Joyce Fox, for instance.

Mrs. Fox, a black working mother of two, and her machinist husband were like many a working-class family - crowded out of the housing market. As a result, they moved into a small, two-bedroom apartment in a less-than-desirable Chicago neighborhood. Despite their two-person income, high interest rates and skyrocketing housing prices had just about made a shambles of their dreams of owning their own home.

Today Mrs. Fox and her family are happily padding around their renovated three-bedroom ranch house here in Chicago's south-side neighborhood of Roseland. Homeowners for less than a year, the Foxes were able to host their annual family reunion in their own home for the first time.

''I love it,'' says Joyce Fox, giggling in her freshly painted and carpeted living room. ''All this space,'' she says, hugging her slender, 7-year-old daughter Serita to her side. ''She got to pick out the color of her own room. And she said to her brother, 'Johnny, don't you come into my room now.' '' One bedroom per child is still a luxury the Foxes never thought they could afford.

But it is one they have afforded - along with a brand new kitchen, an enclosed garage, a family room, and a lawn.

Who gets the credit for this unexpected bonanza of homeownership? The Foxes are quick to give credit where credit is due - the Chicago Department of Housing and its six-year-old urban homesteading program.

''We had almost given up hope of ever owning our home,'' Mrs. Fox explains over a plate of pastries and the din of noontime soap operas emanating from a room nearby. ''Oh, we had talked off and on of buying a small apartment building and making a go of that, but it wasn't until I heard from a friend of mine about the homestead program that I thought we could actually get a house.''

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But get a house they did - just as nearly 300 other working-class Chicago-area families have since the adoption of the program seven years ago.

Initiated as a Housing and Urban Development pilot project back in 1976, the Chicago urban-homesteading program has ballooned into one of the six leading homestead programs in the nation, with over 280 families settled and another 61 families ready and waiting. Eighty-one United States cities currently participate in the program, and another 25 cities are scheduled to take part as further federal funding is appropriated. While most HUD programs have been curtailed under recent federal cutbacks, the $7.8-million-a-year homestead program is scheduled to expand.

Not that the present program has much to do with the clearing-brush-and-planting-crops type of chores that many Americans associate with the old Wild West land-homesteading program of the turn of the century. In this modern, citified program, would-be homesteaders fall more to the paint-and-varnish type of upkeep. Today's homesteading properties are not sagebrush-studded acreages west of the Mississippi, but boarded-up inner-city dwellings with mortgages that have been foreclosed by the Federal Housing Administration (FHA).

In Chicago alone, the FHA deals with over 300 such properties a year. While most of them are resold on the open market, some 15 percent are annually turned over to the Chicago Department of Housing as potential homestead properties. In order to qualify for the homestead program, a house cannot be worth more than $ 15,000 as is, or require more than $27,000 for renovations. Nationally, over 6, 500 vacant houses (many with foreclosed mortgages) have been purchased from the FHA by individual cities and ''resold'' for $1 to qualified families eager for a crack at first-time homeownership - families such as the Foxes.

The Smalls are another black Chicago family who had quietly treasured dreams of homeownership while renting a two-bedroom city apartment and squirreling away their savings for an ever-growing down payment. Thanks to the homesteading program, a couple of years ago Mr. and Mrs. Marvin Small were able to buy their tree-rimmed South Chicago home for $1 and sink their savings into the neccessary repairs. Today their home is valued at more than $50,000.

The Smalls and the Foxes are fortunate. When it comes to urban homesteading; many may aspire, but few qualify. In Chicago alone, over 20,000 applicants annually compete for the 50 or so homestead properties that become available each year. Most cities, Chicago included, hold lotteries to determine which families will receive these homes. In order to weed out the tens of thousands of applications that annually stream in from aspiring homeowners, program officials have set up a rigorous selection process.

In order to qualify, a homesteader must be 18 years old or older and the head of a household. No singles may apply; this program is stringently maintained for families only. Also, a potential homesteader must be a Chicago resident and demonstrate a real need for housing - a five-member family living in two rooms, for example. The family must have a verifiable source of income sufficient to support the home and household. Any bankruptcies within the past three years automatically disqualifies a candidate. And finally, a homesteader must be willing and able to live in the house for three years in order to gain full title. These regulations generally slim down the applicant pool to about 3,000.

Once an applicant has been accepted into this group of semifinalists, the housing department makes a thorough check of all the applicants' statistics. This includes a job and marriage verification as well as a credit check. Also, a home visit is arranged to determine whether an applicant really has the ''right stuff'' to become an urban homesteader.

''The move from being an apartment dweller to homeowner can be very traumatic and fraught with unusual responsibilities,'' says Loisteen Rountree, Chicago homestead program director. ''We basically want to avoid embarrassing the family by moving them into a house and then having to move them out again when things don't work out.''

To avoid such pitfalls Mrs. Rountree selects her homesteaders with unusual care. Economic limits are imposed on the families. Families of four earning above $33,200 are not eligible, but neither are families earning below $13,800 viable candidates. Program officials have determined that when a family's income is too low, the properties cannot be sufficiently rehabilitated or maintained.''Basically, we are looking for working families,'' Mrs. Rountree says. ''Ideally we would like both parents to be working, so in case one of them loses his job, the house payments can still be made.'' Mrs. Rountree is proud of the fact that of the original 44 families participating in the first lottery, all are still in their homes. ''We haven't lost anybody yet,'' she grins.

Once the lottery drawing has been held(the city likes to hold one a year, depending upon how many homes are available) the 250 or so families that have survived the cutoff are invited to go on a bus tour of the available properties. ''Oh that's the part I like best,'' Mrs. Rountree says. ''We load them up and drive them around the city and show the houses. The families are so excited. It's just like a carnival. But they're also in dead earnest, too, trying to pick out the house they want the most.''

This may require a bit of imagination on the part of some of the would-be homeowners. Most of the houses have been vacant and subject to vandalism for months. And families may be hard pressed to see beyond the plywood boards nailed to the windows and the graffiti scrawled on the walls. Nevertheless, visions of one's dream house seem to shine through the rubble.

''We washed walls for a month,'' says Mrs. Small, running a hand through her graying hair while trying to describe the smoke-damaged disaster that had constituted their now-elegant living room. ''The kitchen ceiling was in heaps on the kitchen floor. We had to put up a few new walls as well,'' she explains with a shrug, now that the memory of those repairs has begun to fade. ''Now that the work is done, I love it,'' she adds.

Once a family has made its housing choice, the housing department matches the families to the their dream homes by taking into account a family's preference as well as its space needs. ''For instance, we would never put a five-person family into a two-bedroom house, nor would we put a three-person family into a four-bedroom house,'' explains the director. ''We try to make sure the families are going to fit.''

Once families are matched to houses, the hard part - the renovation - begins. While many homesteading programs simply turn the properties over to the new owners as is, the Chicago Housing Department provides the first $5,000 worth of repairs free to the new owner.

''These are the most basic repairs - structural, electrical, plumbing - just to get the home inhabitable,'' Mrs. Rountree says. After that, the homeowner pays for the other repairs - paint, varnish, carpet, and whatever else he wants to add - out of his own pocket, or with a low-interest subsidized loan arranged by the city.

The Chicago Housing Department has determined that while this approach initially increases the cost of the program to the city, it also ensures that homes will get repaired sooner and remain inhabited longer. ''In the long run, it is really very cost effective,'' Mrs. Rountree explains. ''Not only has a public eyesore and target for vandals been eliminated, but the city has regained a taxable property. And another decaying neighborhood has gotten a little closer to being saved.''

Indeed, one of the major thrusts of the program is to bring low- and moderate-income families into existing neighborhoods that are ''just about to go.'' And one of the program's biggest effects, beyond providing propertyless families with homes, has been the ripple effect. Neighbors of the Foxes and Smalls and the other 283 Chicago homesteaders are just as delighted as city officials to see boarded-up, abandoned properties again become freshly painted, lived-in homes with manicured lawns. Such efforts at sprucing up one house have a tendency to snowball in the immediate neighborhood, program officials say.

''Any time a family moves into a boarded-up home, it's time for celebration, '' says Mrs. Rountree. ''The family is happy, the neighborhood is happy, and ultimately the city is happy. Why, you're helping some family realize the all-American dream.''

And helping families realize that dream also goes beyond mere financial assistance. ''Oh, we can get them into the houses easy enough, but you also have to monitor and counsel them, too,'' Mrs. Rountree says. As most homesteaders find themselves forced to take out loans of several thousands of dollars in order to complete the necessary repairs (homes must pass a housing-code inspection within 18 months of purchase), the city provides financial-counseling services during a three-year transition period.

''We provide each family with a counselor who regularly visits and goes over every bill and the family's weekly budget just to make sure they can manage,'' Mrs. Rountree says. Yet even with the assumption of home-improvement loans, most families find their monthly housing costs to be not much more than what they formerly paid in rent - just a different array of bills. Additionally, the homestead program also holds regular workshops and seminars on general budgeting , minor do-it-yourself repairs, and how to contract for major renovations. ''After three years of our assistance, the families should be able to stand on their own two feet; and it's then that we hand them the deed to their house.''

Mrs. Small's husband, Marvin, is one man who doesn't seem like he needed much help standing on his own two feet. A self-employed barber who speaks only when spoken to, and then usually prefaced with broad smiles, he is one homesteader who elected not take out a loan. Leery of long-term debt, Mr. Small chose to renovate his house from his own savings and largely by his own efforts.

''We could have gotten a mortgage usable toward the cost of repairs,'' he explains, ''but we preferred to do the work ourselves and pay for it as we went. I've got three notebooks full of receipts and bills to prove it,'' he smiles.

To prove it, he also has a fully renovated basement-cum-barbershop-cum-family-room that he proudly shows off with little prodding. The room is a handyman's wonder: paneled walls, mirror-covered pillars , a built-in fish tank that is somehow tinged bright red, and shellacked-cement floor through which gleams a pattern of carefully sprinkled gold glitter. Two small side rooms have been turned into a sewing room for Mrs. Small and an at-home barbershop for Mr. Small. ''He was supposed to cut my hair this morning, '' says Mrs. Small sheepishly. Mr. Small flashes her a quick grin. This looks to be the home of their dreams.

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