State Solutions for Affordable Homeownership

The lasting solution to our homeownership crisis is increasing the supply of homes that are affordable to families and individuals who have been shut out of homeownership opportunity.

It’s not just about increasing the supply – it’s about protecting the affordable supply from prospectors and dedicating it to individuals whose wage levels are so far apart from escalating housing costs that they stand no chance of accessing even entry-level homeownership.

Many states and localities have previously enacted consumer-facing policies like First-time Homebuyer Credits, Mortgage Credit Certificates, and Down Payment Assistance grants. While these programs do serve homebuyers who can understand and access them, they are not universally available and they are difficult to interpret, particularly for inexperienced buyers.

Supply-side policies have focused almost exclusively on affordable rental housing – offering developers a tax credit (LIHTC) in exchange for increasing the number of affordable rental units in a given market. Affordable rental housing is an important element in the housing spectrum, but it is not a lasting economic opportunity for the residents or for the greater community. Sadly, affordable rental housing initiatives are often met with ‘NIMBY’ responses that further stigmatize residents.

Homeownership creates a vastly different impact than rental housing.
Homeowners can leverage equity in order to invest in current opportunity (like education) and, critically, they can pass that equity on to the next generation. That phenomenon – the generational transfer of wealth – is one of the reasons for the vast net worth divide across racial demographics. Homeownership also strengthens communities, encouraging civic involvement and residential longevity that build and sustain appeal and increase property values and the tax base.

So, how do we make it happen?

We can introduce an increased supply of affordable homes almost immediately through the passage of state level tax credits for affordable homeownership development. A model using federal NMTC credits uniquely has been in practice for more than a decade, generating thousands of new homes for residents whose typical income is 80% AMI or below. The fiscal impact to state budgets hard-hit by COVID is not immediate because the credits are deferred. And, it is not costly because the credit-driven model brings in private dollars that would otherwise not be spent in distressed communities. The investment uplifts individual residents and strengthens tax bases that return revenue to their localities and the state.

These are just a few of the details. For more information on the state tax credit model and how it can benefit your constituents through 2021 legislation, let’s share an introductory call. Click here to get in touch.

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