Column by Jack Ryan
Here’s the no-brainer statement of the day: Creating affordable paths to home ownership will lift more people — and save more neighborhoods — than low-cost renting ever has.
The topic is reviewed by The Washington Post, which reported on efforts in the rundown Chicago neighborhood of North Lawndale to build up to 1,000 small homes. Only two 1,600 square-foot residences have been built so far, and neither one has been sold. But Illinois has contributed money to the program and federal policymakers are paying attention.
The Post described the work as “a homegrown plan to challenge more than 40 years of public policy orthodoxy that has favored renting over owning for the working poor and instead use homeownership as an engine for economic stability.”
Good luck to this homegrown plan. Even though it is based in one of America’s biggest cities, communities of every size — including many small towns in Mississippi — have wrestled with the challenge of declining homeownership. Some good ideas ought to come out of this.
The Post traces part of the problem to well-intentioned government programs that had unforeseen side effects. Among them was the Low-Income Housing Tax Credit, a 1986 effort that provided a financial incentive for developers to build high-density rental housing.
That program has become the country’s largest source of financing for affordable housing. Which is fine to a point. But the two problems with low-income housing are that they tend to reduce the ability of residents to work toward buying their own home. And they rarely help revitalize the neighborhoods where they are located.
The story also cited the Nehemiah homebuilding effort in New York City. Since it began in the 1980s, 4,500 homes have been built, helping create more than $1 billion in property value for the homeowners. And there are two more key points about New York:
“The project has a less than 1 percent foreclosure rate, and a study conducted by Nehemiah found that children who grew up in the development earned 53 percent higher wages than their parents,” the story said.
Meanwhile, the Chicago group has raised $12.5 million and hopes to start building 50 more homes soon. It has held workshops for prospective buyers to explain how mortgages work, what’s involved in a home inspection and what kind of homeowner insurance would be needed. They also hope to help buyers avoid the predatory lenders who did such damage in the 2008 Great Recession.
For too long, efforts to get working-class residents of modest means into a home of their own were left to volunteer groups like Habitat For Humanity. The country needs to expand that work to make more of a difference.
Public rental housing serves an important and necessary purpose, and this is not meant to criticize it. But 60 years of evidence says we need more homeowners and fewer lifelong renters. Taxpayer money spent on programs that work would be a good investment.
