Making Homeownership a Reality: Survey of Habitat
for Humanity International Homeowners and Affiliates (April
1998, 143 p.)
Habitat for Humanity International has produced more than 60,000 homes since its founding in 1976. As one of the most successful homeownership programs for low-income families, its housing production volume easily puts it in the ranks of the Nation's top 20 homebuilders. Making Homeownership a Reality: Survey of Habitat for Humanity International Homeowners and Affiliates, sponsored by the HUD Office of Policy Development and Research, presents key findings from a survey of Habitat homeowners.
Habitat and Affordability
The report finds that total housing costs -- utilities, maintenance, mortgage, taxes, and insurance -- have not become a burden for most Habitat homebuyers. Monthly housing costs average $434, and homebuyers pay an average of 25 to 30 percent of their incomes on loan repayment, taxes, and insurance at the time of purchase. The report includes the following observations:
Monthly mortgage costs are very low for most Habitat homeowners. The median sales price of Habitat homes was $33,478, leading to an average mortgage payment of $269 per month, which represented 12 percent of homeowners' incomes at the time of closing.
Habitat primarily serves low- and very low-income families. Only 20 percent of homeowners believe that they would have bought a home without Habitat's assistance. About 43 percent of households earned less than one-half of the median household income, while 34 percent earned between 50 and 80 percent of the median income.
Without zero-interest-rate loans and low purchase prices, program participants probably could not afford homeownership. If Habitat affiliates had initially charged interest rates of 8 percent and required purchase prices 50 percent higher than those now offered, at least 40 percent of the homeowners surveyed could not have afforded their homes.
Homeownership Outlook
According to the survey, the most common benefits of homeownership were the pride and increased stability that families received from feeling secure about their homes. Most homeowners planned to continue living in their homes and eventually pass them on to their children.
Additionally, more than one-third of the homeowners had received some financial support from their Habitat affiliate in addition to the substantial upfront subsidies to make housing affordable.
The report finds that Habitat affiliates face several financial challenges. Despite rigid homebuyer selection criteria, a careful selection process, and deep housing subsidies, Habitat affiliates must often intervene to prevent loan repayment defaults or failure of homeowners to meet other obligations such as property tax payments. Rising real estate taxes and homeowners' insurance may also pose problems for future low-income homebuyers. Finally, rising land costs in many areas constrain Habitat affiliates from finding acceptable home sites in attractive neighborhoods.
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