The City of Boston will reallocate funds from the Boston Police Department’s overtime budget to the Department of Neighborhood Development for a program that will assist first-generation homebuyers, Mayor Marty Walsh announced Monday.
The DND will enter a partnership with the Massachusetts Affordable Housing Alliance to grant candidates up to $5,000 toward purchasing a home. The City is looking to increase home ownership rates for first-generation buyers, moderate- and low-income buyers, immigrants and people of color.
Grants will be given as a 2-to-1 match, meaning that eligible homebuyers must contribute $2,500 of their own money to receive the full $5,000, and they must also earn less than the area median income, according to a press release by the Mayor’s Office.
One hundred fifty homebuyers are currently enrolled in the program, with 14 having already purchased, according to the press release.
“Now more than ever, in Boston, we must take steps to create equitable opportunities and access to resources for all Bostonians,” Walsh wrote in the release. “Improving pathways to homeownership can help address disparities in wealth, making this a vital part of our equity work.”
The move comes as City Councilors Michelle Wu and Andrea Campbell — both candidates in the upcoming mayoral race to fill Walsh’s expected vacancy — campaign on pushes for racial equity in Boston.
“To secure housing stability for all, we need targeted investments for the nearly half of our residents who earn less than 60% of AMI,” Wu wrote in a statement to The Daily Free Press. “We can’t expect mini grants and formula tweaks alone to solve our city’s housing affordability crisis.”
First-generation candidates face two major hurdles in finding opportunities to purchase a home, said Symone Crawford, director of homeownership education at the MAHA. The first is covering the cost of a down payment and closing on it.
“For instance, I’m a homeowner, I have my daughters,” Crawford said. “If and when they do decide to purchase, I have the ability to, because I’m a homeowner, to use the equity within my home to give her that additional leg up.”
That leg up is something often not afforded to minority home seekers.
Nearly 50 percent of parents of Black children own a home compared to 83.8 percent among white families, according to biannual data collected from 1968 to 2015 by the University of Michigan’s Panel Study of Income Dynamics.
The second hurdle is the expertise, Crawford said.
“Making sure that you have your attorney present to protect you, making sure that you get a home inspection done,” Crawford said. “If someone don’t have the experience or don’t have a family member that have the experience, then it becomes a little bit more burdensome, and frightening actually, to go through that process.”
In Boston, where the average cost of a single-family home is nearly twice the national average, affordability presents another challenge, said Jeff Levine, a lecturer of economic development and planning at the Massachusetts Institute of Technology.
“Even if you can access a program that’s a zero percent down payment program or some other way of overcoming that hurdle, just the overall cost and the mortgage payments you still have to make tend to be pretty high,” Levine said.
Boston’s House Price Index has been increasing over the past 10 years, according to the U.S. Federal Housing Finance Agency.
Parental homeownership, expertise and pricing aside, cultural relationships with debt are another facet complicating the path to owning a home, said Maureen Flynn, deputy director of the Boston Home Center.
“Different cultures think of debt in different ways,” Flynn said. “In some cultures, debt isn’t allowed.”
Flynn added that while $5,000 is not enough to meet the needs of many first-generation homebuyers, it is beneficial that the money is a grant and not a loan.
While these hurdles have complicated the process in the past, the path to equitable housing also involves a relationship between public and private sector lenders.
“We had three lenders and now we have a fourth participating in our ONE+ program,” Flynn said. “We’re relying on them to participate, and for the most part they’re doing a great job.”
The City’s ONE+Boston program provides eligible first-time homebuyers with the lowest fixed-interest rates on 30 year mortgages available.
While the Walsh administration oversaw strong growth in Boston’s housing market, growth was unequally distributed, said MIT Professor of economic geography and regional planning Amy Glasmeier.
“Over the course of the Walsh Administration, 53,000 [housing] units were built, but they weren’t built for working people,” Glasmeier said. “They were built for the segment of the Boston economy, young or old, who are college educated, able to find a job in tech, have a good credit record, don’t have a lot of debt and if you don’t have the configuration like that, then you’re stuck.”
Correcting this trend takes more than just financial assistance from state and local governments, Glasmeier said.
“There needs to be the use of other mechanisms for the production of housing for working families that they can afford,” she said. “It’s financial instruments for sure, but it’s also the actual structures themselves.”
Walsh pledged to make investments in citywide equity programs from a $12 million cut to the BPD’s overtime budget in June.
After the $250,000 reallocation, Crawford said she’s hopeful more community-oriented funding will follow.
“Seeing that those funds are actually helping disenfranchised people get into homes, I think is a great thing,” Crawford said. “Hopefully we can see more of this sort of thing where funding goes towards helping mental health and other social issues, but definitely homeownership is one of the biggest social issues we have right now.”
She added that she hopes MAHA will be able to have a strong relationship with Boston’s next mayor — whoever that may be.
Glasmeier said the person best equipped to solve this problem would understand the issue and be committed to using their resources to provide for that segment of housing.
“It really matters as to who they know, and the ways in which they can advantage the system to those who are currently disadvantaged,” Glasmeier said. “And it’s a tough path to follow.”