Homeownership Alliance Highlights Best Practices for Increasing Housing Affordability

Cities across the country are taking action to make housing more affordable for American families, according to a report released by The Homeownership Alliance, a coalition of almost 20 organizations committed to ensuring support for the American housing system of which Freddie Mac is a charter member. The report, Affordable Homes: Best Practices for America, is a survey of affordable homeownership programs in the top 20 municipalities nationwide.

Programs in the following cities in the study are highlighted as best practices for increasing affordable homeownership: Atlanta; Baltimore; Chicago; Minneapolis, Minn.; New York; Philadelphia; Phoenix; Pittsburgh; Riverside, Calif.; San Diego; Seattle and Washington.

By identifying existing best practices for increasing homeownership opportunities, the Alliance hopes to foster information sharing among state and local housing officials that will encourage widespread, lasting progress on this pressing issue.

“Making a real difference is going to take a cooperative effort,” said Homeownership Alliance President Rick Davis. “We hope this report will spark a much-needed dialogue on affordable housing programs.”

The best practices in the study fall into five categories and represent both demand-side efforts (e.g. homeownership tax credits, housing cost assistance programs and voucher assistance programs) and supply-side efforts (e.g. agency development initiatives and developer incentives). Types of practices include:

Homeownership Tax Credits: Homeownership tax credits have helped tens of thousands of families become first-time homeowners. The District of Columbia First-Time Homebuyer Tax Credit program provides up to $5,000 in tax relief to low- and moderate/middle-income local homebuyers. Its success is evident in the 21,821 households that filed for claims between 1997 and 2001, comprising $76.7 million in tax credits.
Housing Cost Assistance Programs: Housing agencies in cities across the country, including Baltimore; Seattle; Riverside, Calif.; Phoenix; New York and Washington, provide funds for participants to use toward the costs of owning a home – i.e. down payments, closing costs and mortgage payments. For example, Seattle’s House Key Plus, a down payment assistance program tied to the Washington State Housing Finance Commission’s first mortgage program, has provided average assistance of $40,704.63 to 60 homebuyers with an average income of $40,069.
Voucher Assistance Programs: In recent years, locations across the country, including Pittsburgh and Philadelphia, have begun making federally funded Section 8 vouchers applicable to mortgage payments. With more than half of its residents living in Section 8 housing throughout the city, the mission of the Housing Authority of the City of Pittsburgh (HACP) is to provide renters with a clear and direct path to homeownership. To that end, the HACP has implemented a program allowing public housing residents and Section 8 renters to use their Housing Assistance Payments (HAP) toward monthly mortgage payments and expenses. Philadelphia offers a similar program.
Agency Development Initiatives: In cities including Minneapolis, Minn.; Riverside, Calif.; Atlanta and Philadelphia, agencies are investing directly in increasing the supply of local affordable housing by rezoning or annexing land specifically for the purpose of affordable housing development, investing in the development of affordable housing or funding the rehabilitation of existing unoccupied housing properties. To date, the Philadelphia Housing Authority (PHA) has invested in building four major developments, two of which have sold out. The homes are located in communities close to schools, stores and parks and are affordable to eligible families, with mortgage rates as low as $700.
Developer Incentives: In some cases, public agencies, such as those in Chicago, Atlanta and Phoenix, work with private developers to increase the supply of affordable housing. In the last two years, Chicago has created 466 affordable units through the Affordable Requirement Ordinance that requires that residential developers receiving discounted city land or using city financial assistance set units aside for affordable housing. Housing officials also anticipate that the new Downtown Affordable Housing Density Bonus program will help the city create 700 affordable units in the next three years.

Homeownership has been a cornerstone of the country’s economic strength throughout the past decade. “State and local governments nationwide must expand their efforts to ensure that every family in America has the opportunity to own a home,” said Davis. “The more Americans we have owning homes, the stronger our economy and the greater the benefit.”

Full text of Affordable Homes: Best Practices for America, as well as more information on the work of the Homeownership Alliance, can be found on the Web site at www.HomeownershipAlliance.com.