Last year, ATTOM Data Solutions, released a study showing that wages in about 80% of the United States can’t keep up with the rising cost of buying a home. In fact, for about 59% of the areas studied, it was cheaper to rent three bedroom housing, rather than buy.
As such, it should come as no surprise that the number of low-income individuals surpasses the amount of affordable housing available. “Is it a housing problem, or is it an income problem?” says Chris Herbert, managing director of Joint Center for Housing Studies at Harvard, “I would say it is both.”
The thing is, a lack of affordable housing hurts everyone. Would-be homeowners are left renting and forced out of certain areas (and opportunities), while rising prices can also make it more difficult for people to sell their homes. Yikes.
Luckily, it’s not all bad news, thanks to the Federal Housing Finance Agency, which is allocating “$502.2 million to the National Housing Trust Fund and the Capital Magnet Fund.”
Don’t get me wrong, this isn’t going to fix the systemic problems that have created this disparity between income and housing prices, but it’s definitely a nice start. For instance, the National Housing Trust Fund commits at least 90% of its funding to creating and maintaining affordable housing, with the other 10% going to help first-time homeowners take on some of the unexpected costs of homeownership.
Meanwhile, the Capital Magnet Grant Fund focuses on providing grants to help revitalize low-income communities. They’ve created over 13,000 affordable homes so far, though only about 12% of these homes are for homeownership – most are rentals. Still, not bad when it comes to helping low-income citizens afford the rising prices of living.
Both groups have great track records, so it will be exciting to see how they utilize this donation of over half a billion dollars. The president of the National Association of Realtors®, Vince Malta, also commended the move.
“Initiatives that address the root of the nation’s housing affordability crisis must take center stage in discussions surrounding the future of housing finance,” Malta explained, “NAR looks forward to leading this discussion and working with the FHFA (Federal Housing Finance Agency) to ensure all responsible, credit-worthy individuals can achieve the American Dream of homeownership.”