大象传媒

Bree Jones rolls deep. Her nonprofit real estate firm, , has a buyers collective of 60 households. They have all gone through a proprietary six-month curriculum Jones built from scratch, covering everything from financial planning to maintenance, community building, and the history of redlining鈥攁nd how those factors continue to shape the Baltimore neighborhood where they all want to buy homes.

鈥淚t鈥檚 about building an intentional, mission-driven community,鈥� Jones says. 鈥淲e talk about common principles鈥攁nti-gentrification, the importance of shared cultural assets, green space assets, things that aren鈥檛 part of our common dialogue in America anymore. Older generations did it in the 1940s, 鈥�50蝉, 鈥�60蝉.鈥�

Jones says her buyers collective members have all come through word of mouth so far. She talks about her work everywhere she goes鈥攍ike volunteering with a local church, where a pastor鈥檚 family is now part of her collective. Some are from the area of West Baltimore where Parity Homes is focusing its work; others are originally from the area but moved out when they were teens and now want to move back.

Parity Homes keeps an architect on retainer to help buyers select one of six floor plans for Baltimore鈥檚 signature row houses. Options include splitting the home into a two-flat to create some extra income for the homeowner and another affordable housing unit. Three buyers collective members have made their selection, and Jones hopes to deliver their homes later this year, hopefully by July.

鈥淭hey call me every week [to ask] how鈥檚 the house coming along,鈥� Jones says.

For all that Jones has made possible so far, it鈥檚 not yet sustainable. For now, Parity is selling the homes for less than what the firm has paid to acquire them. That鈥檚 because the homes suffer from the appraisal gap, which disproportionately affects historically Black neighborhoods. After generations of disinvestment, which started with redlining in the 1930s, the homes today require significant rehab, the cost of which can far exceed the values that the homes will appraise for, even after rehab.

Some help may soon be on the way. Last year, Maryland state legislators  to create the Appraisal Gap From Historic Redlining Financial Assistance Program. Jones says it started with a conversation between her and Maryland Sen. Antonio Hayes.

鈥淗e had asked me to testify about a related issue, and after I did that, he asked if there was anything he could help me with, and I didn鈥檛 know better, so I brought up the appraisal gap,鈥� Jones says. 鈥淚t was a little bit of beginner鈥檚 luck.鈥�

The funds would fill in the gap between the costs of rehabbing a vacant home or constructing a new home on a vacant lot and the appraised price at which the home eventually sells. However, the bill did not go into effect until the start of the fiscal year in Maryland on July 1, which meant the new program never made it into budget negotiations for that fiscal year.

Jones is banking on it being funded in this year鈥檚 budget, which is currently under negotiations. She knows other potential emerging developers like her鈥攅specially other women of color鈥攚ould appreciate the support to do similar work in other disinvested areas across Maryland.

鈥淔inancing mechanisms for entry-level housing stock are still few and far between,鈥� Jones says. 鈥淏ig federal programs, like low-income housing tax credits or new-markets tax credits, don鈥檛 really do it. Why not try to make something that fits us?鈥�

The real estate industry has long had 鈥�.鈥� According to Enterprise Community Partners, . At the Urban Land Institute, one of the country鈥檚 major real estate developer networks, 鈥攁nd 69% identify as men.

Even the real estate subsectors of community development and affordable housing that serve many Black and Latino neighborhoods have helped perpetuate those disparities. In New York鈥攚here Jones was born鈥攖he nonprofit Community Preservation Corporation has financed tens of thousands of affordable housing units in communities of color since 1974, but according to its internal analysis, .

Often, lenders cite the lack of collateral. But that is a chicken-and-egg situation, given that the persistent history of redlining means White homeownership rates and typical White household wealth levels in general remain far beyond that of non-White households.

Jones wants to help break that cycle by getting the homes she鈥檚 developing into the hands of primarily, though not exclusively, Black households. When otherwise talented but less experienced developers of color approach lenders with little to no wealth from family or friends as a starting point, most lenders find it challenging to work with them while also satisfying their regulators or rating agencies. Those number crunchers come in on a regular basis and scrutinize each and every loan a lender has made since the last time they were there for an examination or rating update.

It鈥檚 not impossible but it鈥檚 very challenging for lenders to battle with regulators or rating agencies over and over to defend multiple acquisition and construction loans to multiple emerging developers of color with little to no personal collateral鈥攅ven more so when everyone can see down the road that the developer may not be able to sell the properties at a price that can cover the cost of acquisition and construction. Often, the lenders who are most willing to work with borrowers in these situations will also charge the highest interest rates on the market as compensation for taking on the perceived 鈥渞isk.鈥�

Bank regulation isn鈥檛 inherently evil. The point is to ensure the safety and soundness of the banking system. But the reliance on personal collateral as a risk-management factor to dominate all other risk-management factors , though it can seem that way if you don鈥檛 have any collateral.

Jones has relied on corporate donors, state grants, philanthropic fellowships, and a few personal connections to 鈥渧ery patient鈥� seed investors to get Parity Homes going. She鈥檚 amassed a portfolio of 40 properties鈥攈alf through foreclosure auctions or private sales, and half via Baltimore鈥檚 annual tax lien sale. The lien sale is  after complaints that .

Jones says the tax lien process could also be a lot friendlier to smaller, mission-driven developers like herself. In one 10-or-so-block area she鈥檚 been examining closely, she says she鈥檚 identified at least 300 properties with tax liens, maybe 70% of them with liens in the six figures. Properties can take up to two years to drag through the foreclosure process. 鈥淭here鈥檚 so much inventory in Baltimore City, but it鈥檚 all locked behind liens, encumbrances, and other barriers,鈥� Jones says.

The most recent statements from City Hall  15,032 vacant houses in Baltimore. Jones says the true number could be much higher鈥攑erhaps four times as many. For every 50 vacant properties, Jones says, there may be 50 different owners, half of whom are deceased, a third in defunct LLCs with outdated, if any, contact information, 鈥渁nd the rest are owned by speculators who are trying to profit off other people鈥檚 trauma.鈥�

The situation bears similarities to other predominantly Black urban areas, , where local community organizations and small emerging developers face a maze of tax liens upon mortgage liens layered in with a tangle of LLCs and dead-end brokerage phone numbers.

In this post-COVID housing market boom, Jones sees more speculators swooping in with all-cash deals in the neighborhoods where she has properties in the pipeline. Blocks where empty shells used to go for $5,000 are now selling for close to $100,000. Those sales might be connected to the  in single-family rental properties.

In its sales, Parity Homes puts in a 鈥渟oft second鈥� mortgage鈥攅ssentially a slice of seller financing that the buyer doesn鈥檛 have to repay unless they sell the home later or refinance their mortgage. It helps keep the primary mortgage affordable for the homeowner while serving as a disincentive against house-flipping.

Given all the cards stacked against her鈥攚oman, Black, new to real estate development, focused on neighborhoods faced with ownership challenges鈥擩ones is taking all the help that is worth her time. She鈥檚 an alumna of the , a program of Capital Impact Partners, a community development financial institution (CDFI) based in the Washington, D.C., area. The initiative is one of  to help diversify their base of developers.

JPMorgan Chase funded the Equitable Development Initiative, which recently awarded a $2 million recoverable grant to Parity Homes, in conjunction with , intended to support more women of color in real estate.

鈥淲e鈥檙e building the bench for diverse developers in this region,鈥� says Dekonti Mends-Cole, vice president for the mid-Atlantic at JPMorgan Chase Global Philanthropy.

The $2 million infusion enables Jones to finally hire her first full-time staff and get her the runway to acquire and sell at least 200 formerly vacant homes. If the appraisal gap program from the state kicks in, or perhaps new federal support from the , Jones might be able to acquire, rehab, and sell even more.

Jones is also hopeful that with larger institutional support, the city will take emerging mission-oriented developers seriously as part of the solution to fix long-standing vacant property challenges.

鈥淭he issue is so big it creates a feeling of helplessness, but an institutional partner makes it seem like we can actually do something about it,鈥� Jones says.

This article was originally published by . It has been lightly edited for 大象传媒 Magazine.