Homeownership Is More Affordable Today

By Marietta Rodriguez
Director, National
Homeownership
Programs & Lending

A new wrinkle was added to the housing affordability debate recently with the news coverage in The Wall Street Journal of a paper by Andrew Davidson & Co. The paper and the article published in the Developments blog at The Wall Street Journal, suggests that housing affordability today is not better than it was in 2006, the peak of the mortgage bubble.

We couldn’t disagree more.

At NeighborWorks America, and throughout the NeighborWorks network, affordability simply means how much of a homeowner’s current income has to go each month toward the payment on a safe, sustainable mortgage. Under that definition, the cost of mortgage finance is as low as it has ever been.

30 year fixed mortgages are at historically low rates. This, combined with a broad-based decline in home prices,  means housing affordability is significantly better than it was back in the go-go 2000s. Nominal and real household income are down from the middle part of the 2000s, but not so much to negate the affordability benefits of very low mortgage rates and lower home prices.

What is affecting the ability of the housing market to recover fully is not a question of affordability, but of credit accessibility, and here Mr. Davidson gets it right. His research finds that because homeowners today need larger down payments to be approved for a mortgage, the all-in cost of homeownership has increased. NeighborWorks America won’t argue with that; higher down payments do mean that it costs more and that it is harder to become a homeowner. We just think that the higher down payments costs are an unnecessary barrier to homeownership.

NeighborWorks America has been helping its network of nonprofits make homeownership accessible to people with very little down payment, but who still are good candidates for homeownership. NeighborWorks America and NeighborWorks organizations couple support for low down payment mortgages with homebuyer education. Homebuyer education significantly helps to reduce default, by providing prospective homebuyers with the information they need to avoid the toxic mortgages that proliferated in the 2000s and advice on purchasing a home that they could afford the moment that they close on the sale, instead of hoping some time down the road that a refinancing will lower the payment to more affordable levels.

Since we have seen even homes with higher down payments go into foreclosure in recent years, we know that equity -- while an important driver of default -- is not the only driver. Lenders need to more aggressively and more broadly consider the value of pre-purchase homebuyer education when evaluating a borrower. Such education mitigates default and improves homebuyer accessibility, which in today’s low rate market, also means improved homebuyer affordability.

Turning Foreclosure Around: Jobs and Home Rehab

By Ascala Sisk, Senior Manager
Neighborhood Stabilization
NeighborWorks America

The foreclosure crisis and the economic crisis are inextricably linked. Families and neighborhoods experiencing high foreclosure rates are also those facing high unemployment. It is our experience at NeighborWorks America that solutions which support local job creation are an essential component of neighborhood revitalization. One of the key challenges of the foreclosure crisis is the negative impact vacant and blighted properties have on communities. Recently, Citi Community Development and the Citi Foundation launched an initiative which addresses both vacancy rates and small business job creation. Their Partnership for Small Business Development program convenes and funds a working group of national organizations that provide training and business opportunities to small business contractors owned by women and minorities.

According to the United States Small Business Administration, 65 percent of the new jobs created in America between 1993 and 2009 were in small businesses, with minority-owned businesses leading the way. Between 2002 and 2007, minority business growth outpaced that of non-minority firms in terms of total revenue, employment, and number of firms. NeighborWorks America supports this program because it is helping rehabilitate properties at the same time it supports local jobs for traditionally underserved groups. It has the potential to bring back strong neighborhoods and provide sustainable benefits to communities so that they can not only recover, but also prosper.

NeighborWorks America has also done its part to restore jobs while simultaneously serving local communities. In fiscal year 2011, NeighborWorks America and its affiliated NeighborWorks network created and supported an estimated 26,000 jobs. This is in addition to the many programs we run to help residents buy or rent affordable homes, build (or rebuild) communities and increase their financial capability.

Economic recovery and community stabilization will happen when jobs return.  It’s that simple and that difficult. Every effort to address one side must be connected to the other for us to succeed.

For more on ways communities are responding to the impact of foreclosures and vacancy visit the NeighborWorks America website: www.StableCommunities.org.

Making a Difference with NeighborWorks Week 2012

By Eileen Fitzgerald
Chief Executive Officer
NeighborWorks America

Every year NeighborWorks Week gives us an opportunity to step outside our normal routines, roll up our sleeves and connect with the people and places we work so hard to support. This year, NeighborWorks Week will take place June 2-9, and I am pleased to say that we have over 160 events planned thanks to the dedication of NeighborWorks network organizations across the country, and support from NeighborWorks America staff.

By volunteering this week, and throughout the year, we put our words into action and learn what’s working, and what challenges remain for local communities. These efforts enrich our work while providing much needed support and partnership to the communities we serve.

In FY2011, the NeighborWorks network generated 240,000 volunteer hours through the Community Building and Organizing program. This NeighborWorks Week I’ve invited all DC staff to a volunteer opportunity in Montgomery Housing Partnership in Silver Spring. We’ll be planting flowers, mulching playgrounds, painting and picking up trash around the property.

I hope that you, wherever you are, can volunteer at one of our many local NeighborWorks Week events, and that you will share your experiences and photos with us via Facebook and Twitter (#NWW2012).

To learn which events are near you, visit http://events.nw5.org/. You can also see pictures from last year’s events in our Flickr album.

On the Road with Chuck: Part II

Chuck Wehrwein
NeighborWorks America COO

When I arrive in DC, I know I’ll be getting lots of questions about why I left the beautiful Rocky Mountains for the city life, so I want to explain my reasons here. The truth is that it was no easy decision. I’ve been living in Colorado for over 11 years and my children have grown up there, so I would not be headed east if I weren’t strongly motivated to join the NeighborWorks team.

In fact, my enthusiasm is already high enough for others to take notice. The day before I left Denver, my wife and I were meeting with LeeAnne, our realtor. When LeeAnne asked me to explain what NeighborWorks is about and why I was leaving, I spent several minutes describing the organization, its members and the great work that takes place in communities across the nation. LeeAnne was immediately struck by the passion in my voice, and commented that she, too, felt inspired by our vision of building strong, vibrant communities.

Pagedale Senior Housing was built across from
a Save-a-Lot grocery as part of the 24:1 initiative

I found a great example of this work in St. Louis last Friday. I met with Beyond Housing’s leader, Chris Krehmeyer. We talked a little bit about his experiences as a NeighborWorks organization and he showed me a small sample of the economic development projects and housing they’ve been building in the inner ring suburbs of St. Louis as part of a program called 24:1. This initiative has three main goals: strong communities, engaged families and successful children and it is addresses each goal by really integrating the various elements of community – from district schools to housing for the elderly to a new grocery store making fresh produce more available to residents.

Great work like this is inspiring and is indicative of why I am so pleased to be taking on my new role as COO. I’m looking forward to meeting with and hearing from more of our members in the coming weeks as we begin to formulate, together, how we can better develop responses to the myriad needs and opportunities in our communities across the country.

On the Road with Chuck: Part I

Chuck Wehrwein
NeighborWorks America COO

My name is Chuck Werhwein and I’m looking forward to being the next Chief Operating Officer for NeighborWorks America. In my new position, I will be overseeing activities in communities all over the US, so I’ve decided to make my journey to DC reflect that; I’m making a road trip from Denver, Colorado to Washington, D.C., and stopping to meet NeighborWorks staff and network members along the way.

Denver Convention Center’s
Blue Bear (Creative Commons)

Although I’ve been in the community development field for over 20 years (bio here), there is always more to learn. My goal is to make my first few months a time for listening. Right now, I’m most interested in answering one big question: “How can we accelerate community change in times of constrained resources?”

I jump-started my trip in Denver at the Rocky Mountain District office, followed by a visit many miles later with Midwest Regional Director John Santner and his team in Kansas City over delicious local BBQ.

Kansas City BBQ (Creative Commons)

In both places, I was struck by the breadth of our staff’s experience and their deep commitment to residents and members. Their diverse backgrounds and extensive knowledge are extremely valuable resources, critical to our corporation’s ability to deliver much-needed community services with limited staff and budgets. I left Kansas City with a real sense of optimism about our ability to work as partners while tackling the challenges that lie ahead.

My next stop is St. Louis, Missouri, where I’ll meet with Beyond Housing’s Executive Director Chris Krehemyer and gain the perspective of a network member. In the meantime, I’ll be reflecting on what I’ve learned and brainstorming ideas for the future.