Thousands of buyers locked out Many still can't afford down payment, costs

December 20, 1992|By Steve Kerch | Steve Kerch,Chicago Tribune

HONOLULU -- Despite low interest rates and stable home prices that have made housing relatively more affordable, thousands of potential first-time buyers remain locked out of the market because they are unable to meet down payment or closing cost requirements.

The difficulty first-time buyers are having in entering the existing home market is reverberating throughout the economy, the National Association of Realtors believes, making it tougher for potential move-up buyers to sell their homes and climb up to larger existing or new houses.

And the lack of affordable housing for first-time buyers isn't just a problem for low-income or inner-city residents, analysts say. It stretches across economic brackets and geographic boundaries to touch civil servants in the suburbs as well as young, urban professionals.

"Decent, affordable housing just continues to be out of the reach of some households," said Alan Yassky, chairman of the NAR housing needs committee and a Spring Valley, N.Y., Realtor.

"But it is at the point of affordable housing that the health of the community, the health of the nation and the health of our industry all come together," said Mr. Yassky, who chaired the Realtors' first town hall meeting on the topic at the group's recent convention in Hawaii.

The hardships that face first-time buyers are evident in homeownership rates, which have fallen in the United States through the 1980s. A report by Harvard University's Joint Center for Housing Studies cited a lack of affordable housing as one possible cause for the low rates in a study of 12 metropolitan areas.

At a time when rates should be rising because of the interest rate climate, they are showing little movement. And that is

especially true for buyers who are young or black or Hispanic.

"Low interest rates are good for housing, but they don't solve all the nation's housing problems," said Dorcas Helfant, the Realtors' immediate past president.

In a joint effort to develop innovative ways of addressing these affordable housing concerns, the NAR and the U.S. Conference of Mayors have established demonstration programs in 23 cities across the country that feature both the public and private sectors.

The first 11 cities were designated in 1991, and 12 more cities were added to the program this year.

The cities selected for the program were chosen on the basis of geographic and economic diversity, the need for affordable housing and the willingness of the local realty board and the city government to cooperate in affordable housing efforts.

'Working together'

"Basically what we have is everybody working together, pulling in new participants, tapping new resources and tapping the expertise of the board of Realtors in order to provide affordable housing," said Rockford, Ill., Mayor Charles Box, who also serves as chairman of the housing committee for the mayors' conference.

In Rockford, one of the cities designated in 1991 and which has also received a $500,000 grant from the Ford Foundation to advance its Affordable Housing Coalition, the programs include everything from taking paint donated by the local Valspar Co. to spruce up senior citizen apartments to joining with the Zion Church to build and rehab townhouses.

"The idea behind the Realtor-Mayor program is that it can be tailored to fit individual communities," Mr. Yassky said.

"The key is that the doors have been opened up."

The Realtors hope to get at least one-half of their local boards nationwide to produce some kind of affordable housing initiative. Currently, more than 146 boards, representing about 27 percent of the NAR's 750,000 members, participate.

The programs tend to be small, putting maybe one or two dozen families into homes over a period of time. But the projects are meant to show other groups that they can follow the lead.

Portland, Ore.

Among the other programs in operation:

* In Portland, Ore., local Realtors are working with Emanuel Hospital and Health Center on an employer-assisted housing program designed to put first-time buyers into neighborhoods near the hospital that are in need of redevelopment.

"The hospital is in a wonderful area, but it had gone down over the years. It wanted to help, to do something in there," said Wilma Caplan, president of the Portland Association of Realtors.

The city got involved by donating several homes that had been repossessed for back taxes. The hospital set up a $100,000 fund that lends down payment money to its qualified employees who agree to live in homes costing no more than $65,000. That money is repaid from employees' paychecks over five years.

The Realtors agreed to conduct homeownership counseling classes for prospective buyers, a condition required by the first mortgage lenders participating in the program through the U.S. Department of Housing and Urban Development.

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