Affordable Housing Demand Up Due to Flood of Foreclosed Homes

Demand for affordable housing surged to the roofs in Minneapolis and St. Paul cities of Minnesota. A flood of foreclosed homes left many residents out on the street, desperately seeking for affordable shelter.

But the increase in demand for low income housing has taken its toll on CommonBond Communities, a housing nonprofit organization. The nonprofit is experiencing a drop in financial support just as low income housing demand surged.

The organization has been building houses for low-income families in St. Paul for almost 38 years now. But due to the economic downturn, it experienced a surge of applicants way too many for the organization to handle. So far, the organization has received about 5,800 applicants for its 5,000 houses that are almost 97 percent occupied.

According to market data, nearly 120,000 homeowners in Minnesota are using 50 percent of their income for housing payment. The normal percentage of income that a person should allot for housing is 30 percent. Industry experts are expecting an increase in the backlog of families who will apply for subsidized affordable housing. Also to be expected is the flood of foreclosed homes due to financial difficulties.

CommonBond Communities Chief Executive Officer Paul Fate noted a high percentage of homeowners who have lost their houses due to foreclosures. He added that middle-class families who are struggling financially are adding to the growing demand for affordable housing.

CommonBond is the largest nonprofit organization in Minnesota that provides affordable housing at below market rate to seniors, families and people who have special medical needs. Due to the skyrocketing demand for affordable houses, the nonprofit organization has changed its business model to accommodate the trend.

The organization used to focus on building tall apartment buildings with about 1,000 occupants, senior apartments and family townhouses in suburban locations. The organization owns over 100 buildings, with 90 percent of them located in Minnesota and 10 percent scattered around Wisconsin and Iowa. The properties owned by the organization range from the eight-unit Success Family Housing to 504-unit Skyline Tower.

The organization has adjusted its operations due to the recession and instead focused on purchasing existing buildings in St. Paul and Minneapolis which it then converts into apartments.

Industry experts said that the flood of foreclosed homes in the area and the dwindling financial support are making it hard for nonprofit organizations like CommonBonds to deal with the growing number of families seeking affordable housing.