Should We Encourage Low-Income Homeownership?
Published August 07, 2009 @ 12:00PM PT
Sociologist Dalton Conley argues yes, and now especially, given the affordability of a bottomed out market:
"the solution to our troubles is not to restrict homeownership, but to expand it...owning a home can be one of the best ways for a poor family to save and accumulate assets: recent history aside, the value of a house does typically rise, and its owner avoids paying rent and gets a tax break."
I've gotta be honest with you, I'm extremely wary of this argument. At a most base level, and this shows you how far I've moved back to the left since entering MIT in 2004, when I would have supported Conley's argument 100%, there's an argument to be made for providing more affordable, safe, rental housing as a basic good in society, not just as a sorry, second-class substitute for homeownership. And it's the argument for rental housing that seems especially timely to me. Secondly, homeownership has a lot of additional costs beyond renting, that without a better all round safety net to gird low-income homeowners, I fear would undermine the assumed economic security and gain homeownership offers.
Right now, I am both a renter and a homeowner. The rental property I live in is pretty great, though definitely not in as good condition as the unit I bought 4 years ago (a unit that is worth depressingly less than what I paid for it - Hello, my name is Leigh & I'm an underwater homeowner. Hi Leigh). But there are so many fewer costs - no property taxes, no condo (or homeowner association) fee, no payments for repairs. Relief from property taxes alone saves me $2000+ per year - or almost an extra $200 per month. Sure, I'm not building equity, but I'm also paying about $300 less per month for my rental property than I am for my condo unit. So now we're looking at roughly $500 / month that I'm "saving" by renting. That's a substantial difference in liquidity, so crucial to a household budget.
Coming back to the equity issue, Conley's startling exception to his rule - "recent history aside" - points to the precariousness of this singular social benefit to homeownership. Boom and bust cycles in the housing market, though perhaps less pronounced than this one, are not uncommon. Property values rise and fall, and the overall property values in neighborhoods where low-income buyers can afford to purchase might not be all that impressive to begin with, until a wave of gentrification rolls in, which then forces increases in property taxes, which can severely challenge inflexible, low-income budgets.
It's really risky to argue for more homeownership without also arguing for at least improved wages, greater job security, universal healthcare, and improved energy efficiency. For all I know, Conley supports all these social improvements. But the narrow argument for homeownership alone as an economic stepping stone for low-income homeowners is one we tried valiantly in the late 1990s and throughout the Bush Administration. Because we didn't put the proper regulatory controls and social supports around it, we ended up screwing a whole slew of moderate-income and lower-income homeowners in our abusive securitization of the mortgage industry. To his credit, Conley is arguing for a modest, service-heavy path to homeownership run by knowledgable non-profit and community development organizations. It's expensive but paying off, according to his example.
But honestly, and I can't believe I'm saying this out loud...$2B for 27k homeowners? Do you know what we could do for $2B? How much green rehab we could provide to existing rental properties? The possible transportation improvements we might make in low-income communities? The incentives we could provide to bring groceries into neighborhoods? The educational subsidies we could provide?
After 5 1/2 years studying housing and urban policy, I've gotten pretty wary of these "more privatization!" arguments as anti-poverty strategies. But you already knew that, didn't you. What do you think of his proposal?
(Photo from Oakland (CA) ACORN action to stop a foreclosure auction, by Jacob Ruff)
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Comments (3)
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Author
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Leigh is a PhD candidate in urban planning at MIT, and a consultant on U.S. Gulf Coast recovery. She sits on the Board of the Allston-Brighton Community Development Corporation in Boston, and has worked with non-profits, foundations and local governments on policies and programs aimed at reducing urban poverty and inequality.
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88 People
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Funny on August 7th Rosemary Williams in Minn., lost her home. The law officers came and moved her out 3 days before they said they would be there She also could not afford both repair and mortage.
I personally can not hope to buy a home. An average of $680 a month does not leave alot of savings for the down payment.
Yes. I would love to have a house in the country and turn it into a low cost luxery doggie spa where they have their own rooms and get to play with other dogs.
But I am so grateful for the nice landlord I have. I am behind on rent and he is waiting, mo harrassing or anything. we fell behind on rent with a repair, or replacement of tires.
There is no way we can afford to pay for house repairs.
Fight the Bullies even if they are the Courts.- by Jan LightfootLane
Foreclosures are nothing new. They have just increased in numbers. Often they affect tenants who are bullied by the banks, to be out the same date as the former owners. To both owners and renters I say check out what ever you are told. You have rights. When a bank becomes your land-land, they must abide by the same rules governing all landlords. In some states that is the day after taking over the property. So renters can remain in the apartment until the new landlord follows the procedure. This gives the renter a notice to quit of X amount of days. Many states provides the renter with the right to go to court.
If Rosemary Williams of Mlp Minn., had $49,000, setting around, she would have paid off her mortgage. She is a well liked minister residing her house for a few decades. On August 7th she lost her home. She as many homeowners are bullied not just by the mortgage companies but by the Courts.
The judge Zimmerman seems to have a personal dislike of either Rosemary herself. Or of debt beats mortgage holders.
Having experience with judges he evidentially biased against the poor-definitely to some degree, or else he would not have blocked her appeal with an out of this world so called "bond" or civil bond. You recall that piece of the US Constitution saying in liberty filled America "Justice is Not for Sale?"
You recall the 5th Amendment saying, "No person may lose their property without, a trial on the facts." American's believe will be a full hearing, including an appeal. Not an appeal prevented by the court unconstitutionally demanding an outrageous sum of money. Bails and bonds must reflect a legitimate government aim. Not be a barricade against the poor.
Yet the Courts are used to bully the poor. Be it a well liked 55 year old grandma and minister, or tenants in the building the bank wants back. There are laws which must be obey in Minnesota as well as in Calif. And Florida.
When People like Rosemary William files a court action against the judge she is fighting not to just get her home for a few decades back. Or the value she put in the home. She is fighting for owners and renters across this country, so they are not to be bullied by either banks or judges. I pray Rosemary please fight.
Fight the Bullies even when it is our Judges - by Jan LightfootLane
Foreclosures are nothing new. They have just increased in numbers. Often they affect tenants who are bullied by the banks, to be out the same date as the former owners. To both owners and renters I say check out what ever you are told. You have rights. When a bank becomes your land-land, they must abide by the same rules governing all landlords. In some states that is the day after taking over the property. So renters can remain in the apartment until the new landlord follows the procedure. This gives the renter a notice to quit of X amount of days. Many states provides the renter with the right to go to court.
If Rosemary Williams of Mlp Minn., had $49,000, setting around, she would have paid off her mortgage. She is a well liked minister residing her house for a few decades. On August 7th she lost her home. She as many homeowners are bullied not just by the mortgage companies but by the Courts.
The judge Zimmerman seems to have a personal dislike of either Rosemary herself. Or of debt beats mortgage holders.
Having experience with judges he evidentially biased against the poor-definitely to some degree, or else he would not have blocked her appeal with an out of this world so called "bond" or civil bond. You recall that piece of the US Constitution saying in liberty filled America "Justice is Not for Sale?"
You recall the 5th Amendment saying, "No person may lose their property without, a trial on the facts." American's believe will be a full hearing, including an appeal. Not an appeal prevented by the court unconstitutionally demanding an outrageous sum of money. Bails and bonds must reflect a legitimate government aim. Not be a barricade against the poor.
Yet the Courts are used to bully the poor. Be it a well liked 55 year old grandma and minister, or tenants in the building the bank wants back. There are laws which must be obey in Minnesota as well as in Calif. And Florida.
When People like Rosemary William files a court action against the judge she is fighting not to just get her home for a few decades back. Or the value she put in the home. She is fighting for owners and renters across this country, so they are not to be bullied by either banks or judges. I pray Rosemary please fight.
Posted by jan Lightfootlane on 08/08/2009 @ 08:24AM PT
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The best answer I could give at this point is a resounding *maybe*. As things stand, as far as I can see, by encouraging low income people to trade low income renting for low income home ownership they'd just be trading one set of problems for another. Instead of what are commonly landlords renting substandard properties in varying states of disrepair and disrepute and with the landlord lying in wait for a payment the least bit late; they'd be buying a house from a realtor that's most likely got many of the same sorts of issues just that they're now in charge of doing their own repairs, the disrepute (if present) is on a neighborhood scale, and instead of a landlord wanting to kick them out of a rental they've got a mortgage company or bank wanting to steal back the home they've been making payments upon - and often it's easy to do because of the badly written and nearly but not quite fraudulent or at least otherwise unethical contracts involved that made it very easy for payments to get out of hand.
Posted by Danetta Amschler on 08/08/2009 @ 11:23AM PT
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Many people out there might disagree with me. Say I say It to start you thinking.
Two of my underpaid friends owned their home. on past and her children has to pay of Maine Medical care spent on their mother to get the house they grew up in back.
To me it did not seem right that that 83 year old women was put down by her pharmacist for being on welfare and the kids must repay every cent to get the house she want for her kids.
The second one is alive, she paid off the mortgage 20 years ago, and lucky to be able to barter for repairs.
If owning a home is the American dream, and perhaps even a human right why don't the banks sale to the poor at a price they can afford?
We aren't repair services on sliding scales? Others not at the real poverty level, making less than the cost of living pay a few dollars more, so minimum wagers and just above can pay a few dollars less?
Posted by jan Lightfootlane on 08/09/2009 @ 09:09AM PT
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