Though homeownership is not for everyone, for those who are interested in and ready for it, now may be a good time to buy in the District. This Washington Post article highlights that for many young professionals in the City, purchasing a home is a cheaper option than renting. Rental prices have gone up 3.7% each year since 2006, and the fair market price for a 2-bedroom apartment is in the $1400s. With low mortgage rates (below 4% on a 30-year fixed mortgage) and more stable housing prices, now is also the time for low and moderate-income people/families to become homeowners. HPAP, the City’s homegrown downpayment assistance program for first-time, lower-income homebuyers, is in place along with excellent homebuyer education. Such programs are the City’s best investment as the buyer ends up paying the money back and people have an opportunity to build wealth and stability through owning their own home. Now may be the time to buy…
According to a new report by the US Census Bureau, the homeownership rate in Washington, DC increased 10.7% between 2001 and 2010. However, DC still has the third lowest homeownership rate (42%) of all US cities, behind New York and Los Angeles. One of the reasons for the low rate is the transient nature of some of DC’s population, but the more prominent reason is the high cost of homes and condos in DC. When looking at African American residents in DC, the homeownership rate is even lower at 38.8%.
For many, the foreclosure crisis has been pinned on uniformed minority and low-income borrowers as well as policies that support them in becoming homeowners. This myth has led some to consider low-income buyers as not ready for homeownership, as part of the problem rather than the solution.
A recent groundbreaking study by Maurice Jordain-Earl of ComplianceTech researches the demographics of the subprime fiaso and reveals that upper-income borrowers across all racial groups had the largest number of subprime rate loans, followed by middle-income borrowers from all racial groups. The study concludes that the meltdown “is better described as a mainstream white suburbia problem with aspects that affect minorities and urban communities. Erroneous assumptions about the demographics of subprime rate lending will only lead to poor decisions that result in ineffective solutions.”
Manna’s and others experiences have been that low down payments, 30 year-fixed rate loans and financial education/counseling have proven to be the key ingredients for making low-income home buyers successful, even through the foreclosure crisis. And homeownership has been a legitimate and important way for these responsible buyers and their families to build assets and move up the economic ladder. Low-income buyers are and can be part of the answer to the crisis we are in.
There has always and continues to be a wealth gap between whites and minority groups in the United States. According to a recent Pew Research Center study, the median wealth of white households is 20 times that of black households and 18 times that of Hispanic households. Though the gap has significantly widened in recent years, this gap also has deep roots in the history of the United States, including discriminatory policies and practices that limited the traditional way Americans have increased their wealth: Homeownership.
For a history of homeownership and race in the United States, see the below segment of the documentary “Race – The Power of An Illusion”:
The newly released proposed FY2010 budget includes cuts to valuable housing programs, including Local Rent Supplement and housing first. We are currently in the process of parsing through the proposed budget numbers to find where the money is being reallocated.
The city’s tactic of cutting funding to these programs is a temporary fix and will have negative long term repercussions. We are hoping that the city can responsibly raise revenue in order to protect these and other critical housing programs.
Visit Save Our Safety Net for more information and to sign an online petition.
Obviously, Washington D.C.’s still not overwhelmed like some places, which have so many abandoned homes sales prices are averaging $10,000.
But today, RealtyTrac reported that foreclosures had jumped 39.46 percent between May and June 2009 in DC. The total number of filings was 417.
The the rise in foreclosure underscores the need for action and leadership from our public officials. Though the numbers are not as significant as our neighbors in Northern Virginia and Prince George’s County, this is a frightening trend that cannot be ignored.
HAT’s suggestion to the City Council and other public officials is that HPAP (Home Purchase Assistance Program) can be utitlized to stabilize the bottom third of the housing market, thus securing the real estate values in the city. Sadly, HPAP remains woefully underfunded. In FY2010 budget, HPAP has been scaled back to accomodate less than 300 borrowers, reduced by 40% of its historic annual capacity.
Here is testimony by Frank Demarais at a recent public roundtable on foreclosures in the District.