Cape Fear Habitat for Humanity is trying on a new business model for size.

“A lot of people interested in becoming Habitat for Humanity homeowners know what we generally do: build single-family homes on a decent lot,” Steve Spain, the local organization’s executive director, said recently.

The problem is that New Hanover County is short on affordable “decent lots” for those projects, he said, and that has led local Habitat officials to think about creating some denser form of housing, although it will continue to pursue single-family home construction as well.

Enter the Castle Street project: a plan by Hipp Architecture & Development to redevelop the former WAVE Transit property into a mixed-use site with residential, commercial and meeting space. In mid-September, the Wilmington City Council voted to pursue an agreement with Hipp for the project. Part of the project involves building two new multi-story structures that will have ground-floor commercial space and residential condos above for affordable workforce housing.

Habitat sees an opportunity, Spain said.

“It’s common in real estate to have a ‘vanilla box’: space with all the electric, HVAC and plumbing but nothing else,” he added, explaining that the developer will build that basic space and sell several units to Habitat. “We’re looking at a variation on that to keep costs down and to provide opportunities for [Habitat] homeowners and volunteers. We go in and do the walls, flooring, shelves, cabinets.

“We will probably do four to six of these units,” Spain continued. “Another nonprofit partner – East Coast Development Inc. – is planning to develop some too. The existing buildings on the site will be rehabbed for commercial use.”

The target market for these condos will not be families with children – the typical Habitat client – but young people in the service industry who often don’t earn enough to purchase a home.

Of these young workers Spain said, “Millennials are losing maybe 10 years of building wealth, so maybe this is an opportunity for them. [These condos] would have the same income requirements but may appeal to a different demographic. We might see two-adult families where a two-bedroom condo is perfect. Habitat families in a single-family home tend to stay there forever, but these condos might do [for this different demographic] for five years. We’ll see; it’s all new for us. We’re excited at the opportunity to dip our toes in.”

Building wealth through homeownership is always on Spain’s mind. Cape Fear Habitat for Humanity, like its counterpart organizations across the country, has helped its clients build and purchase their own home: the typical American’s most valuable asset.

“Payments against principal we have received from our homeowners now total $6 million, and that amount goes up by $300,000-$350,000 every year,” Spain said. He noted that that amount does not take into account the increasing value of the Habitat-built homes.

Spain said that Habitat’s mission, in addition to providing safe, affordable and good quality housing for people who otherwise would only dream of homeownership, is to build wealth in communities that historically have not had access to financing.

“People in those communities have not been able to build wealth because they can’t get a bank loan – often because of their geography, ethnicity or race,” he said. “They’ve been redlined out of those opportunities. Our program is a way for them to create wealth the way my parents did, and I have: buy a house and make your monthly payments, knowing that some portion is really a payment to yourself.”

Habitat figures that most of its clients will have a household income of about 50% of the area’s annual median income (AMI), Spain said, adding that AMI in New Hanover County is roughly $68,000, so the average household income for Habitat homeowners is around $34,000. This will be true for the future owners of the new condos as well, he added. The organization tries to keep their monthly mortgage payments, including taxes and insurance, at about $700.

Habitat’s use of volunteers and future Habitat clients to construct homes helps keep costs low, making the purchase price affordable for its clients. And the majority of those homes are Habitat-financed at zero percent, further reducing the cost of entry and helping the new homeowners build equity more quickly. If a low-interest loan through a government program makes more sense, however, Habitat can help the homeowner take that path.