A major opportunity and threat to the neighborhood is the condition of its housing. On one hand, the neighborhood offers ‘organic affordability’: smaller homes at lower prices for those willing to make improvements and investments along the way. The studio’s real estate market analysis in the Fall of 2018 showed the average listed price of Indian Mound homes to be just over $56,000 for a typical home that averaged 2.6 bedrooms, 1.3 baths, and an age of just over 100 years.
To get a better sense of the ‘bargain’ opportunities in Indian Mound, the studio toured 3 listed homes and also visited 3 land bank properties, taking measurements and photographs to document the condition of the houses. Student teams then examined the repairs and improvements needed to the homes in order for each house to pass a third party inspection for home buyer programs like FHA, FNMA, or FHLMC. Lastly, teams conducted a design and cost estimating exercise to see what these minimal improvements would cost: the results ranged from $91,000 to over $200,000 in additional investment, beyond purchase price. The high costs were largely due to general deferred maintenance, damaged or inoperative building systems, incomplete or severely damaged kitchens and baths, or unpermitted renovations that had developed problems with water, decay, or settlement.
The main lesson the studio learned were that inexpensive housing in Indian Mound wasn’t necessarily a bargain. Due to the condition of the houses, many of the homes couldn’t be purchased with conventional financing – and because of this, these homes couldn’t be purchased by conventional homebuyers. If you lived in Indian Mound and wanted to stay there, the most affordable houses in the neighborhood had to be purchased with cash, and required expensive repairs. On the other hand, these houses make attractive investments for landlords, who can buy homes for bargain prices and put minimal investment into repairs, quickly renting out a $50,000 house for $800 a month to desperate renters.
For residents that want to remain – and invest – in their neighborhood, well-cared-for but inexpensive homes that can be mortgaged are the only option, aside from infill housing. With few of the former available, infill housing that fits the community’s needs and budget will be a critical boost to the housing stock of the neighborhood.