November 10th, 2021

Long odds for Boston homebuyers

Prices out of reach for most Bostonians

Felicia Richard, a Boston native and long-time resident, started looking to buy her first home in 1995, after her oldest son was born. Nearly three decades later, after eight years away from the city and another year and a half where she was essentially homeless, Richard still has not been able to buy a home.

Richard is not alone in her struggles as a would-be first-time homebuyer. According to data published by the nonprofit Prosperity Now, Boston has a homeownership rate of about 35%. Among households of color, the homeownership rate was about 25%. For Black Bostonians specifically, that rate was about 27%. For the Latino community it was about 15%.

In the context of the recent mayoral election, housing was a major topic of discussion. In the Emerson College poll from the week before the election, the greatest number of respondents — 28% of them — said they thought housing should be the incoming mayor’s top priority in her first 100 days, more than any other topic, including education, crime, police reform or COVID-19.

Richard said a major issue challenging her in her attempts to buy a home has been being able to save enough money while still paying for day-to-day expenses.

“You move one step forward and then you end up two to three steps backward, because the money you’re looking to save to purchase the home — that you can’t afford, because the prices [for homes] are up there — ends up going toward your day-to-day living costs because you pay your rent and then you have food and everything else that you need to purchase,” Richard said.

She said that the apartment in Hyde Park where she currently lives is called ‘affordable,’ but she still struggles to save to buy a home on top of paying rent.

The Boston Home Center (BHC), part of the city’s Department of Neighborhood Development (DND), has educational and financial programs designed to help first-time homebuyers.

Their services start with a first-time homebuyer’s class. Maureen Flynn, deputy director of the Boston Home Center, said it is important to take the class before starting the process of searching for a home.

“I did it. … most people who work at DND who’ve bought did it,” Flynn said. “It really shows you what the process is like and who your team needs to be and in what order you need to do things.”

In the class, which Flynn said is about 10 hours long, participants learn the steps of buying a home and what they need to be aware of to make an informed and responsible homebuying decision. Attendance also earns graduates of the class a certificate that makes them eligible for the other programs the Home Center provides, which help provide financial assistance for those looking to buy a home.

The BHC offers three main programs to prospective homebuyers, Flynn said. The first, the Down Payment Assistance Program, is aimed toward any first-time homebuyers looking to buy in Boston — whether they live in Boston or not — who plan on occupying their home and whose income is 135% of the area median income (AMI) or less. Through that program, prospective buyers can get a loan of between $30,000 and $40,000, depending on the house they want to buy.

The BHC’s One+Boston program is almost a subset of the first, Flynn said, offering money through loans to first-time buyers. But the One+Boston program is targeted at current Bostonians specifically. In conjunction with the Massachusetts Housing Partnership, the city offers money through Community Preservation Act funds, which must be used for the benefit of Bostonians. It also is targeted at households that make 100% of AMI or less.

The city’s third program, called Saving Toward Affordable Sustainable Homeownership (STASH), is targeted at first-generation homeowners specifically. Flynn said first-generation buyers are left at a disadvantage. Where other first-time buyers might be able to go to parents or other family members who can take out a loan against a purchased home to help pay a down payment, first-generation buyers lack that resource.

Through the STASH program, buyers can receive a grant, rather than a loan, of $5,000 toward their first home if they can save $2,500.

The BHC has revamped much of its programming in recent years. They upped the amount homebuyers could receive through the Down Payment Assistance Program about a year ago from around $10,000 to $30,000 to $40,000 dollars. The One+Boston program had its start about a year and a half ago.

The decision to adjust their offerings was spurred by a persistent divide in homeownership for households of color and recognition of the racial wealth gap, Flynn said.

“As we all know, the main asset that most people have in their lives is their home, and that is the biggest reason for the disparity between whites and households of color, in terms of the wealth disparity,” Flynn said. “A lot of the wealth disparity is because so many more whites own their homes than people of color. So, we have concentrated and focused our attention on that problem over the last couple of years.”

The city partners with the Massachusetts Affordable Homes Alliance (MAHA) to offer the STASH program for first-generation homebuyers and to offer one of the first-time homebuyer’s classes. MAHA executive director Symone Crawford noted that the gap that spurred new programing from the BHC is an ongoing issue that is especially pertinent to modern conversations about racial equity.

Flynn said that homeownership is important to give residents greater security and control over their lives. It also gives a source of savings, equitability and upward mobility that households of color may lack.

“Where do we get our legacy for our children if we don’t have the ability to enter into the housing market, the homeownership market, as people of color?” Crawford said. “So, it brings that security and that legacy for our children.”

Richard said she is hopeful that the election of a new mayor might lead to change and new aid for first-time buyers. She was involved with MAHA’s candidate forums, both ahead of the preliminary election and in the lead-up to the general election Nov. 2.

She said she hopes Mayor-elect Michelle Wu and the incoming City Council can act on things like making more city-owned land available for housing and getting more banks involved with programs like One+Boston to offer loans to first-time homebuyers.

“I know a lot of focus is on Mass and Cass, which is a very, very important thing, but there’s other issues as well that need immediate attention, and hopefully they can be worked on either simultaneously or as swiftly as possible,” Richard said.

Crawford, too, said she sees opportunity in the current moment, but she is looking toward the State House and the incoming funding through the American Rescue Plan Act (ARPA), one of three COVID-19 relief packages passed by the U.S. Congress.

Under a proposal from Governor Charlie Baker to the state legislature, $300 million of the $2.9 billion granted under ARPA to the commonwealth in general allocation funds — funds without a specified use that can be used at the state’s discretion — would go toward expanding homeownership programs across the state. In the proposal, the funds would especially be focused on first-time homebuyers.

Baker’s proposal also outlines the use of another $700 million for other housing-related programs in Massachusetts.

Crawford said she thinks Boston has been a leader in trying to address the homeownership crisis, and the availability of ARPA funds offers the state a chance to step up, too.

“The state is finally trying to catch up and is finally trying to do things, especially now that we have the ARPA funds,” Crawford said. “And I’m hoping that with the new mayor, [Boston] will continue this legacy by being even more exponential as they think about how they will try to mitigate this homeownership crisis that we have.”

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