Generational wealth in the U.S. begins with home ownership, says Jenny Hill, board member at Chattanooga Neighborhood Enterprise.
“It’s how we’ve shaped our economy,” says Hill, who also sits on the Chattanooga City Council. “Homeownership is the foundation of building equity and creating prosperity in America.”
Unfortunately, Hill continues, homeownership has become an uphill battle for many Chattanoogans who are priced out of the market.
In February, the median sale price for a local home climbed 8.2% from February 2024 to $330,000, according to Greater Chattanooga Realtors, continuing a recent trend of rising property values. Yet the median household income in Chattanooga leveled off at $61,000, notes the U.S. Census Bureau, leaving a sizable gap between the median income and the median home price in Chattanooga.
“The median annual income for a family of four in Hamilton County is $85,000,” Hill says. “Assuming that family has good credit and a steady income, it has a purchase capacity of $260,000. But the median home price in our community is $330,000. So, you have a $70,000 gap between those two.”
CNE has been on the front line of the fight for housing access for 40 years. As a nonprofit, it’s driven homeownership through various programs and initiatives, including a program that built multifamily housing on smaller than usual footprints. CNE is also the top writer of mortgages for people of color in Chattanooga, says Hill.
Driven by its mandate to develop solutions to problems, CNE has been on the hunt for an answer that can help to span the gap.
And Hill says CNE has found it: modular housing.
Piecing together a solution
CNE is no stranger to home building. In addition to its multiplexes, the nonprofit also has experience building single-family homes. However, negative market forces – including the high cost of materials, land and labor – forced CNE to lower its hammers.
So, when now-former CNE CEO Martina Guilfoil learned about a program that had successfully developed a modular product for single-family home building in Brownsville, Texas, she requested a tour.
“Years ago, the Community Development Corporation of Brownsville (Texas) received funding from FEMA to work on rapid-response disaster housing during the Katrina era,” Hill explains. “They were able to translate that work into a $3 million grant from JPMorgan Chase and Wells Fargo that funded the research and development for modular single-family home building.”
Modular housing refers to prefabricated housing that workers build in sections, or “modules,” in a factory setting. Each module consists of walls, windows and in some cases plumbing and electrical systems. Builders then transport these modules to the construction site, where they assemble them to form a complete home.
Modular home construction has a number of advantages over traditional home construction, Hill says, including speed and cost-effectiveness.
Guilfoil and CNE’s leader of multifamily development traveled to Brownsville with Benwood Foundation program officer Jeff Pfitzer to see CDCB’s program firsthand – and they were impressed, recalls Hill.
“CDCB was looking for organizations like ours to try out their model, so we’ve been learning alongside them for about a year.”
CNE will confront the challenge of homeownership in Chattanooga with CNE Homes, a new, wholly-owned subsidiary of CNE. CNE Homes will utilize modular construction and manufacturing techniques to build customizable, occupancy-ready homes at a Chattanooga facility.
“Modular is an efficiency and volume business,” Hill explains. “You do things the same way each time, which results in less waste, and you implement those techniques within a covered environment. This allows you to control your costs and benefit from steady labor. You’re not beholden to the whims of the weather or a subcontractor, who will always go with the highest bidder.”
To date, CNE Homes has produced a prototype of a modular home with the support of local partners, including Benwood, the Lyndhurst Foundation, the Bobby Stone Foundation, NeighborWorks, United Way and more.
“We wanted to prove that you can build a home at this price point and that we can generate income to do the other work CNE does,” Hill says. “At the same time, we wanted to hit the affordability number that the median four-person family can afford to purchase without a subsidy.”
Mike Pollock, executive director for the Robert Finley Stone Foundation, says CNE’s track record of helping first-time homebuyers aligns perfectly with its mission to help people build cycles of generational prosperity.
“CNE Homes is a worthwhile investment from that perspective since it’s building affordable homes in a scalable model that will almost immediately help first-timers start building equity and hopefully utilize some or all of that equity to help their families prosper. We love this concept.”
CNE unveiled its sample home during an industry and press event in March. The structure was still in four sections, which Hill said led some to believe CNE is building tiny homes. Far from it, she corrects.
“It’s four pieces that will fit together to make one house. We aren’t building tiny houses, we’re building family homes. They aren’t large but they are livable.”
They’re also “stylish and comfortable,” Hill proposes.
“We’re working with architects and engineers in Tennessee to develop a modular license for two floor plans. One will be a three-bed, two-bath, 1,152-square-foot residence, and the other will be a two-bed, two-bath, 864-square foot residence.”
CNE Homes will launch with a business-to-business sales model that focuses on partnerships with area development corporations, nonprofit organizations and developers that own land and have identified mortgage-ready homebuyers. This approach will enable the integration of affordable housing into existing neighborhoods, preserving established infrastructure and connecting families to essential amenities, employment centers and schools.
The challenge, Hill says, will be finding lots on which to build. To that end, she issues a plea to the public.
“To build a sustainable business, we need a pipeline of houses to build. So, we also need land. We’re looking for people who have multiple lots (on which) we can place our homes.
“Maybe you want to build a house and sell it. Maybe you want to build a house and rent it. Maybe you want to rent it lower than market rate price to a college-age person or a new college graduate. There are many possibilities.”
By generating revenue through home sales, CNE Homes will fund other CNE initiatives, reducing dependence on grants and donations. In addition to serving Chattanooga, the program aims to expand its reach across the region. By its third year, CNE Homes plans to establish sales partnerships with regional community development corporations, with expansion into North Georgia projected for years four and five.
CNE’s next step will be applying the lessons it gleans from building the prototype to its strategic plan and then determining the next step forward, whether it’s identifying a manufacturing facility or something else. Whatever that step is, Hill is expecting great things.
“I think business consultants would call what we’re doing a big, hairy, audacious goal. It’s not going to be easy to hit. Not at all. Our methods might be new, but our goal is timeless: getting families into great homes.”