In an effort to provide affordable housing units, Tempe-based Newtown Community Development Corp. teamed up with Phoenix-based 180 Degrees Design + Build to develop a community of micro homes in Tempe.
These 600-square-foot homes were designed to afford first-time homebuyers the dream of home ownership. Those low-wage earners who qualify for subsidies could pay as little as $170,000 to own a home.
The homes are offered at a time when Phoenix home price growth continues to top the nation.
The community of 13 homes is under construction and is expected to be completed by October, said Stephanie Brewer, executive director of Newtown CDC.
As a Community Land Trust, Newtown CDC is able to keep the land while selling the structure to a homeowner.
“We would never be able to produce affordable housing if we had to pay for the land,” she said. “The cost of the land is too high.”
When a homeowner is ready to sell the house back to Newtown CDC, the homeowner gets 25% of appreciation in addition to the price of the home sold, Brewer said.
“They’re building wealth,” she said.
John Anderson, partner and principal for 180 Degrees Design + Build, said his firm teamed up with Newtown CDC to respond to a city of Tempe request for proposals to build tiny homes on a parcel near Rural Road and Apache Boulevard in Tempe.
“We ended up being awarded the project and the land was gifted over by the city of Tempe,” Anderson said.
Brewer said she only had to pay $30 for the land.
These micro estates being built in Tempe are the first homes to be built from the ground up by Newtown CDC.
Looking to West Valley
Newtown CDC has 160 units in its portfolio across Maricopa County, where it has bought single-family homes in existing neighborhoods, renovated them and sold the structures — again, keeping the land — to entry-level homebuyers.
Most of Newtown CDC’s homes are in Tempe and Chandler, but the nonprofit has been making an effort to buy homes in the West Valley.
“We have grant funding to build more houses in the West Valley,” she said, describing the funding as “federal pass-through funding to municipalities.”
Newtown CDC’s operating budget is set to double to $5 million, Brewer said. It is currently $2.5 million.
“Cities are seeing the benefit of it,” she said. “We need more affordable units. There is no way around that.”
Steven Hensley, advisory manager for Zonda, a Newport Beach, California-based housing market research firm, said the unique ownership structure for these homes creates the ability to keep the prices low since the homebuyer doesn’t purchase the land’s value in the transaction.
“It is great to see that companies are getting creative and taking initiative on offering more affordable housing,” Hensley said. “I think this creativity will continue as affordability concerns grow and as municipalities begin taking more policy actions to address it.”
Jono Friedland, a Phoenix real estate agent who just opened Charlottesville, Virginia-based Nest Realty’s first Phoenix office, said this is a compassionate and thoughtful solution to one of society’s most pressing problems.
“Micro estates will prove to be impactful grassroots efforts that truly help people who otherwise would never have a legitimate shot at home ownership, especially in today’s overheated seller’s market,” Friedland said. “Imagine the pride of ownership, restored dignity and sense of true community this project will engender. Everyone wins in this easily scaled model and the successful results can and should be replicated almost anywhere.”