Homeownership Still The Goal of Many; State Looks To Help
A survey of 600 renters found that nearly two-thirds of renters or 63.8 percent say they are very or somewhat interested in homeownership. But 79.8 percent suggested it would be very difficult or somewhat difficult to build the funds necessary for a down payment.
That’s according to a survey conducted between April 8 and May 2 by the Center for Research & Public Policy on behalf of the Connecticut Housing Finance Authority.
“It’s clear people still aspire to homeownership,” Eric Chatman, president and executive director of CHFA, said Monday. “But the biggest barrier is the down payment.”
Since the subprime lending crisis, underwriting guidelines have tightened substantially, making it difficult for many to find their way into the housing market. However, at the same time as banks have gotten stricter about lending, interest rates have never been lower, Chatman said.
This week CHFA’s interest rate for a 30-year fixed mortgage increased to 2.875 percent. The rate had been about 2.75 percent since October, which is the lowest rate in the organization’s 44-year history.
The Connecticut Housing Finance Authority was created in 1969 by the General Assembly as a self-supporting quasi-public housing agency charged with expanding affordable housing opportunities for Connecticut’s low- and moderate-income families and individuals. Since 1969 it has helped more than 130,000 Connecticut individuals and families become homeowners through its low-interest, single-family mortgage programs.
On Monday, Gov. Dannel P. Malloy held a ceremonial signing of a bill that will increase the uninsured cap on CHFA’s lending from $1.5 billion to $2.25 billion.
“Increasing the uninsured cap will allow the CHFA to continue to do the work that it’s doing: to provide low, fixed-rate mortgages to low and moderate income families throughout the state of Connecticut,” Chatman said.
Malloy said without an increase in the cap CHFA would be unable to move forward with projects it’s already started when it’s known that affordable housing is an economic driver and “will make the state a more vibrant place to live.”
But isn’t there risk involved in allowing the agency to take a chance on financing first-time homebuyers in an economy that seems stuck in neutral?
“CHFA is one of the highest performing agencies of its type in the country,” Malloy said. “They’ve managed pretty conservatively, they’ve had good returns. In fact, some of the people standing behind me complain that their returns are too good and they rather see some bigger risks taken.”
Malloy made those remarks at the Lyceum in Hartford after dropping in unexpectedly on Texas Gov. Rick Perry’s luncheon downtown.
He reminded the group that when he signs the state budget it will include $136 million in capital funding to develop or rehabilitate affordable housing across the state, $60 million in bonding as years two and three of a 10-year commitment of $300 million to preserve and upgrade public housing, and $20 million to develop 100 new units of supportive housing with an annualized $1 million for rental assistance subsidies and $1 million for services.
“The need for affordable housing is still great. Recent studies show there is only one affordable rental unit for every three low-income families in need,” Chatman said. “In the current environment developers know there aren’t many other options to financing affordable housing.”
Affordable housing, according to advocates, also is an economic driver.
“Every dollar spent on affordable housing generates $10 to $12 dollars in additional economic activity in the state,” Chatman said.
Betsy Crum, executive director of the Connecticut Housing Coalition said she’s thrilled about the additional funding for CHFA, but she’s even more thrilled about the package of new initiatives for financing affordable and supportive housing.
“I’m really ready to say this is the new golden age for affordable housing in our state,” Crum said Monday.
Housing advocates were happy with the commitment to build more affordable and supportive housing in the state because it wasn’t long ago that they were fighting for funding from the last two Republican administrations.
Malloy said developing more affordable housing is a “significant part of our overall economic development plan.”
“When we invest in housing, we invest in people, communities, and our economic future,” he added.
“Home sales and price data are also showing solid improvement,” Lembo wrote in his June 3 letter to the governor.
According to data from CHFA, in order to purchase a home in the Hartford market with a loan from its organization, a family’s income can’t exceed between $105,000 and $122,000 and the sales price of the home can’t exceed about $406,000.