How Affordable Homeownership Helps the Community

All too often I hear about some parts of the community expressing concerns that building affordable home ownership opportunities only hurts their neighborhood by attracting less than desirable individuals that risks their current home ownership enjoyment. Those typical concerns can’t be further from the truth. Affordable home ownership opportunities create space for families to gain strength, stability, and financial independence through more supply in the housing market, which in turn stabilizes fair market values because we are increasing supply to reduce overall demand.

The chart at the bottom of the page shows why people fall out of homeownership and conversely why some gain homeownership opportunities. It also gives a micro look at the macroeconomics of affordable home ownership. As the picture shows, families move from affordable rental living that is typically at about 30% of gross monthly income, which allows for savings to eventually buy a home, and move into the affordable or market home ownership space. That’s not the case in today’s economic environment (I’d love to talk about national fiscal policy and its impact on our economy but that’s best left for another day). Most families are paying more than what was traditionally considered market rent, which is usually more than a mortgage and more than 30% of their gross monthly income that is being spent on shelter expenses. That precludes them from saving and ultimately attaining independence, stability, and savings for future use. Their income is not any different than those currently enjoying home ownership. The timing of the market increases in fair market values and inflation have made the goal of owning a home a distant dream for many as they spend more than is reasonable on rent. What does that do to the local economy? Well, it precludes them from visiting local restaurants and buying from boutiques and other locally owned businesses. That in turn prevents those establishments from hiring more staff who can then afford reasonable rent rates or even try to save for the future – let alone spend in locally owned businesses. This atrophy of the multiplier effect causes businesses to close and people to stay home and not be out and part of the community. Eventually if the economy continues to shrink, we will see larger manufacturing businesses close their doors and leave our community as well. Sound and look familiar within our community? Is it a coincidence this is happening when rents and market prices for homes have risen to unsustainable levels? Affordable home ownership opportunities give hard working families a chance to own a home and contribute to the tax base and to the local economy like those of us who are fortunate to not spend exorbitant amounts on rent and instead build our equity and our community.

We at Habitat PEH are always looking for land upon which we can build homes, help regrow our local economy and give everyone a chance at strength, stability, and self-reliance through home ownership opportunities.