As Diane McLaughlin reports in this week’s issue, housing advocates and the banking industry are increasingly trying to single out “first-generation” homebuyers for special support in order to build generational wealth in communities of color. These efforts are largely focused on down payment assistance and homeownership prep classes.
Politicians are starting to take a queue from this trend, too. Both Boston mayoral candidates, especially City Councilor Annissa Essaibi-George, have promised they will put a premium on building out these kinds of supports.
But without making a simultaneous, concerted effort to build out housing supply statewide, these efforts will come to naught in the face of plenty of all-cash offers or offers that come with large down-payments.
The importance of efforts to help these first-generation buyers are self-evident to anyone who has exposure to the real estate industry. America has allowed itself to develop into a place where home ownership is not just simply buying rent control for your household – valuable enough on its own – but an asset to fund bigger goals.
Just ask the millions middle-class homeowners who took out second mortgages in the last 20 years to fund their children’s college educations. Or the homeowners who have been able to accumulate extra retirement savings by locking in lower monthly housing costs. Or those who have been able to pass on proceeds of a downsizing home sale to children or grandchildren looking to buy their first house. And because these benefits have largely accrued to white Americans thanks to the hangover from decades of explicitly racist federal housing policy, we face a yawning racial wealth and opportunity gap that must be closed if this country is ever going to fulfill its promise to all is residents.
But voters should be extremely skeptical of political leaders looking to make a big splash with support for home ownership programs alone. As some participants in the Massachusetts Affordable Housing Alliance STASH down payment program have found, just because they have enough money for a down payment doesn’t mean they are on an equal footing with the dominant buyers in today’s marketplace. Symone Crawford, MAHA’s executive director-to-be, told Banker & Tradesman of one symptomatic case where a STASH alumni was outbid five successive times by all-cash buyers.
This is why an approach, like the one championed by Gov. Charlie Baker in his proposal to spend the state’s billions of dollars in leftover federal COIVD aid, is vital: Millions for targeted down-payment assistance, twinned with millions for housing production, including for programs like CommonWealth Builder that helps pay down the cost of building newly-built units so middle- and working-class Bay Staters can afford them.
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