South Bend to see more than 120 new homes replace blighted areas' vacant lots

SOUTH BEND — The city recently inked two deals that will bring more than 120 single-family homes, many of them reserved for low- to middle-income buyers, to South Bend neighborhoods replete with vacant lots.

The larger of the two projects entails $25 million of total investment to build 92 homes on the city's west side, between Lincoln Way West and the South Bend City Cemetery. The South Bend Redevelopment Commission voted last week to give the Indianapolis-based developer Affordable HomeMatters Indiana $5 million to complete the homes by the end of 2029. The nonprofit developer must commit $20 million.

A smaller local development group, 466 Works, will lead a roughly $8.8 million project to build 30 new homes in the southeast neighborhood, filling in vacant lots across several blocks near Riley High School. The commission, which allots tax increment financing money to reduce blight and promote economic growth, agreed to pay 466 Works $3.5 million to help with the three-year project. The deadline is the end of 2027.

Following up on the city's program to tear down hundreds of vacant or abandoned homes , South Bend leaders are increasingly putting money toward infill housing construction in struggling neighborhoods. In these transactions, most of the lots were owned by the city and transferred to developers.

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Conventional homebuilders are wary to invest in blighted areas because the cost of building often exceeds the sales price a home could fetch. But smaller nonprofit developers like HomeMatters and 466 Works use grants and government aid to pare down mortgage payments and sell homes for far less than it cost to build them.

Both organizations say their goal is to sell a mix of market-rate housing and homes that are affordable for renters in distressed neighborhoods.

More than half of the 122 new homes are set aside for households earning less than 120% of the area median income.

HomeMatters will build two- to four-bedroom homes, 40 of which will sell to buyers earning less than 80% of the AMI while 17 sell to buyers in the 80%-120% range. The 466 Works group will sell 12 two- to four-bedroom homes to buyers earning less than 120% of the AMI.

For a family of four, the 120% AMI in St. Joseph County is $106,800, according to federal data. For a couple, that 120% limit is $85,450. The 80% limit for a four-person household is $71,200, and for a couple, it's $57,000.

Anne Mannix, a local housing consultant for 466 Works, shared an estimate that it will cost about $293,000 to build each home, but they'll sell for an average price of $170,000. Mannix said the buyers, who largely have stable jobs, are pre-approved for the purchase by lenders. The group also works with 1st Source Bank to help interested buyers build credit to qualify for a mortgage.

“A lot of them are older people with solid jobs, but they just couldn't afford a house earlier,” Mannix said of 466 Works' clients. The group, which started building in 2016 , has built and sold 15 houses and expects to finish 10 more by the end of this year.

HomeMatters said its buyers, mainly on the north side of downtown Indianapolis, usually spend only $800 to $900 a month on mortgage payments. The 466 Works group expects homeowners to pay on average $1,357 a month. Monthly home payments through subsidized programs can often be cheaper than paying rent.

Steven Meyer, CEO of Intend Indiana , the nonprofit that oversees HomeMatters, said the west side's vision inspired him to build in South Bend. Adding to the momentum of projects such as the new Martin Luther King Jr. Dream Center , set to open in February 2025, Meyer hopes his firm plays a role in the area's rebirth. The first homes will be finished about a year from now, he said.

"We want to make sure that the initial houses being developed in this neighborhood are being offered to folks who are current residents of this neighborhood," Meyer said, "so that they are the first to be able to benefit from the investment."

Charlotte Pfeiffer, a former South Bend Common Council member of 12 years, got pulled into 466 Works during a service at Mount Carmel Missionary Baptist Church , a pillar of the southeast neighborhood where the development group started.

She said the group's operating ethos has been to do something with the neighborhood, not to the neighborhood. Many residents felt the city's plans to tear down homes over the years were too top-down.

Pfeiffer wanted buy-in from the area's Black community. She wanted working-class residents to feel empowered to buy a home.

"People who have rented there for years," she said, "we wanted to make sure that they could afford to upgrade their lifestyle by buying a home."

Email South Bend Tribune city reporter Jordan Smith at JTsmith@gannett.com . Follow him on X: @jordantsmith09

This article originally appeared on South Bend Tribune: South Bend to see more than 120 new homes replace blighted areas' vacant lots