NAACP Starts “Homeownership Matters”

Markeshia Ricks PhotosWhen city firefighter George Chin saw the brick house in Wooster Square, it was love at first sight. Thanks to a new program that gave him $10,000 toward a downpayment and closing costs, he’ll soon be moving in.

“It almost brings a tear to my eye,” Chin, 29, said of buying his first house. “I work for my city. I grew up here and went to school here. Now I own a home here.’

Chin is among the first of what the Greater New Haven Branch of the NAACP hopes will be a wave of new homeowners in the region thanks to the relaunch of a program to help people clear financial hurdles.

Branch President Dori Dumas announced the program, called “Homeownership Matters,” at the NAACP headquarters on Whalley Avenue Wednesday, part of a partnership with the Community Foundation for Greater New Haven and Neighborhood Housing Services.

“Every American deserves a piece of the pie,” Dumas said. “This program will help to improve opportunities for urban homebuyers with a $10,000 five year, interest-free forgivable loan to assist in the purchase of homes.”

People qualifying for the loans have the loans completely forgiven if they remain in their homes for the full five years. To qualify, applicants can earn up to 100 percent of the area median income (or somewhat higher if they purchase homes in low-income census tracts).

The program is a spinoff of a similar program seven years ago that was the result of a partnership of the NAACP and the former First Niagara Bank. Then NAACP Jim Rawlings worked to secure $7.5 million in funding to address economic inequity through the Community Reinvestment Act. Dumas said that the original program assisted more than 70 new homeowners in the Greater New Haven community and several small businesses that would not have qualified for traditional mortgages and loans.

Before First Niagara was acquired by Key Bank in 2016, $1 million left from that original funding was transferred to the Community Foundation for the Homeownership Matters Program, according to foundation President & CEO William Ginsberg.

Now the foundation is committing that $1 million to the relaunch of the program. So far three people, including Chin, have qualified, with another 37 potential homebuyers in the pipeline.

“We are eager to put that money to work for the good people of this community,” Ginsberg said. “We have known homeownership is good for neighborhood revitalization, neighborhood stability, and family stability. It is as true today as ever, homeownership remains too low in New Haven, much lower than in the surrounding communities, in the state as a whole, and in the rest of the country.

The housing market has rebounded in recent years — meaning construction of market-rate housing that people with low to moderate incomes cannot afford. That makes the Homeownership Matters program even more important, Ginsberg said.

Dumas noted that of the more than 50,000 households in the city, only 14,092, or 28 percent, own their homes. When those numbers are broken down by race, 37 percent of white households own their homes, compared to 27 percent of black households and 18 percent of Latino households.

And whether they rent or they own, many who live in New Haven are cost burdened, or severely cost burdened, meaning they’re either paying more than 30 percent or almost 50 percent of their income toward their housing cost.

“Just over half of the city’s households are cost burdened at 52 percent and 29 percent are severely cost burdened,” Dumas said.

Mayor Toni Harp said one of the lessons learned from the Depression is that homeownership is tied to not only individual wealth building but to generational wealth building. Having the NAACP take on access to homeownership as a justice issue is important, she said. She said this renewed effort will complement many of the programs that the city offers such as the Re:New Haven program, which also offers incentives to buy a house in the city.

“What I see as mayor is more developers creating market-level housing that people who already live here can’t afford,” she said. “That’s why homeownership matters.”

Harp noted that New Haven students who grow up in a home that their parents own have a better chance at going to a state school tuition-free through the New Haven Promise scholarship program because they live in the city.

Bridgette Russell, managing director for Neighborhood Housing Services and the housing chair for the NAACP, said to be eligible for forgiveness and the zero percent loan, applicants must commit to being an owner occupant for five years. They also must participate in an education and counseling process and meet income guidelines. People interested in the program can find out more during an information session at ConnCAT in Science Park on Feb. 24. (Click here to register for the session.) Their lender also has to be on board.

Chin, who found out about the program after seeking help from the Neighborhood Housing Services, said that buying his first home was a stressful process. He’s certain that he would not have been able to do it without the financial help.

“Getting something like that granted to me was definitely a blessing,” he said. “I probably wouldn’t have a house right if not for that.”

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posted by: NewHavenTaxTooHigh on February 14, 2018  11:12pm

“Every American deserves a piece of the pie,” Dumas said. I guess that’s true if you believe in entitlement. I believe Every American deserves an Opportunity to Earn a piece of the pie.

posted by: THREEFIFTHS on February 14, 2018  11:30pm

Do not drink the kool-Aid..You are better off renting.

Millennials, take note: If you’re looking to build up your nest egg, home ownership isn’t really all it’s cracked up to be. In fact, a new study published on Thursday shows that renting may very well be the best way to go about it.

The numbers, crunched by Florida Atlantic University, Florida International University and the University of Wyoming, determined that the property appreciation most homeowners expect doesn’t necessarily stack up in terms of wealth building.

Hence, FAU economist and co-author of the study Ken Johnson says that while the American Dream is alive and well, it needs a revision.

“When considering buying and building wealth through equity appreciation versus renting and reinvesting in a portfolio of stocks and bonds, property appreciation does not change the results,” he said. “On average, renting and reinvesting wins in terms of wealth creation regardless of property appreciation, because property appreciation is highly correlated with gains in the traditional financial asset classes of stocks and bonds.”

In other words, the old adage that those who don’t, or can’t, buy a home are “throwing their money away on rent” isn’t necessarily true.

In fact get ready for the tax hikes that are coming.

posted by: LookOut on February 15, 2018  12:15am

threefifths - the decision to buy vs rent is a complicate one with many facets.  Over the years, buying has been a better use of money but it is possible that renting could be better in the future….HOWEVER, your statement about taxes is very misleading.  Owners pay for higher taxes directly.  Renters pay through an increase in market rents.  Either way, everyone pays (although some are subsidized).

posted by: NewHavenTaxTooHigh on February 15, 2018  2:18am

I should have added that I am happy for firefighter Chin. He looks like a fine young man, and we’re fortunate to have him as a homeowner in New Haven. Congratulations!

posted by: Elmer Shady on February 15, 2018  2:34am

Buying a house in New Haven is a specious investment at best…..
Being encouraged to participate in the system is downright criminal…..

It is a great way to build long term residents until the next bubble bursts…..
Pike International is alway there to scoff up the ‘bust’....

posted by: Kevin McCarthy on February 15, 2018  9:03am

3/5ths, you misunderstood the finding of the study. It states that “property appreciation is highly correlated with gains in the traditional asset classes of stocks and bonds. “ In other words, in any given period, you will make as much by buying a house as you will buying stocks and bonds.

Homeownership is not for everyone, even if you can afford to buy a house. A household that thinks it is going to move in a couple of years is better off renting. But for someone like George Chin, who presumably won’t be moving soon, homeownership is likely to be a good deal.

Homeownership is the most common way for households to build wealth. Redlining and other forms of racism foreclosed this option for many POC. This has contributed to the huge racial inequality in wealth, which you yourself have noted in previous comments.  Programs like this can help, in a small way, undo this legacy.

posted by: THREEFIFTHS on February 15, 2018  10:06am

posted by: NewHavenTaxTooHigh on February 14, 2018 10:12pm

“Every American deserves a piece of the pie,” Dumas said. I guess that’s true if you believe in entitlement. I believe Every American deserves an Opportunity to Earn a piece of the pie.

How about the entitlements that the crooked bankers and hedge funders got.How about the corporate welfare programs, funds issued through tax breaks, subsidies and grants.

Ten Examples of Welfare for the Rich and Corporations

. Over 48 big corporations received over $100 million each. GM was the biggest, at a total of $1.7 billion extracted from 16 different states, but Shell, Ford and Chrysler all received over $1 billion each. Amazon, Microsoft, Prudential, Boeing and casino companies in Colorado and New Jersey received well over $200 million each.

. Federal tax breaks for wealthy hedge fund managers: Special tax breaks for hedge fund managers allow them to pay only a 15-percent rate while the people they earned the money for usually pay a 35-percent rate.

Huge corporations that engage in criminal or other wrongful activities protect their leaders from being prosecuted by paying huge fees or fines to the government. You and I would be prosecuted. These corporations protect their bosses by paying off the government. For example, Reuters reported that JPMorgan Chase, which made a preliminary $13-billion mortgage settlement with the U.S. government, is allowed to write off a majority of the deal as tax deductible, saving the corporation $4 billion.

So your point?

posted by: THREEFIFTHS on February 15, 2018  10:13am

posted by: LookOut on February 14, 2018 11:15pm

threefifths - the decision to buy vs rent is a complicate one with many facets.  Over the years, buying has been a better use of money but it is possible that renting could be better in the future….HOWEVER, your statement about taxes is very misleading.  Owners pay for higher taxes directly.  Renters pay through an increase in market rents.  Either way, everyone pays (although some are subsidized).

Some states like New York have rent control and Rent Stabilized.The landlord can only jack the rent up so much .

What is the Difference Between Rent-Controlled and Rent-Stabilized Apartments?
In New York City, there are two forms of rent regulation: rent control and rent stabilization.

These regulations are in place to ensure that average New Yorkers are not priced out of the rental market.

in fact they need Rent-Controlled and Rent-Stabilized in this state.Do tnbe math it is better in this day and time to rent.

posted by: THREEFIFTHS on February 15, 2018  10:21am

Let us do the fact this Blog says it all.

The Money Pit: The Untold Secret Of Home Ownership

Rent vs. mortgage: Okay, we all know that you pay a crapload of interest on your mortgage, and you pay it up front. You do not pay interest on rent. If you buy a house for $205,000 and had no interest and a monthly payment of $1200, you would pay off your home in 171 payments (14.24 years). But that doesn’t happen. Instead, following the strictures of my own home loan, you pay $1200 bucks a month for 30 years at a fixed rate of interest. That’s an extra 16 years of payments, for a total of $230,400 that you pay over and above your principal. That means you’re paying $435,400 to own your home in 30 years. At that rate, it has to more than double in value just for you to BREAK EVEN.

Now, let’s not forget about homeowner’s insurance. Mine currently runs about $650/year, and it goes up by about $50 a year. Even if we say the price rises $50 every three years, you will pay $23,850 in 30 years of ownership IF you have no claims that cause your rates to rise more than my built-in inflation. This brings our 30-year total to $458,850.

And we also have the delightful surprise known as property tax. My property tax is about $3,000/year. Some urban areas run as much as $10,000/year and rural areas as low as $800/year. If I use my own tax amount as an estimate and assume the amount due every year does not change. I will pay $90,000 in tax over 30 years. Our grand total is now $548,850, just for the bare minimum a homeowner has to pay.

Now let’s compare this to an apartment. My rent will likely be a bit less than a mortgage payment, but just to be generous, let’s say I increase my standard of living throughout that 30 year period. Let’s use $800/month for five years, $1000/month for ten years, $1200/month for 15 years. That gives us $384,000.

Part one

posted by: THREEFIFTHS on February 15, 2018  10:25am

Part two.

With an apartment, we have no property tax, so nothing is added to our total. We also do not have homeowner’s association dues, maintenance fees, landscaping, yard service fees, remodeling, refurbishing, appliances, etc. Some eager beavers might beg their landlords to let them repaint, but let’s just say you’re content to call the manager when the toilet clogs and that’s it. You have no additional costs added to your total.And what happens if you want to move? If you rent, all you do is ride out your lease, and lose a portion of your deposit ($100? $200

Let’s compare:

30 years of home ownership: $584,850

30 years of rental: $389,205

The renter saves $195,645 over 30 years.

Do thew math.In this day and time your are better off renting and you can even rent a house.

My bad I can only write off up to 10,000 dollars on your taxes.

posted by: 1644 on February 15, 2018  10:30am

House prices in CT are still well below 2008 highs, and really increasing only at the rate of general inflation, which is far worse than the stock market.

Housing prices generally rise with demand driven by an increasing population and a finite supply of land.  Presently, Connecticut is losing population.  Trump’s massive, debt funded increase in military spending may change that, but we have yet to see it.  Moreover, housing is an incredibly risky investment.  A house is hard and expensive to sell. Given transaction costs of eight to nine percent, a low to no money down buyer is immediately “underwater” as soon as he buys.  If he cannot make his mortgage loan payments, the borrower is still liable to the lender for the full amount due plus late fees, attorney’s costs, etc., which means the lender can go after other assets of the borrower or attach his wages with a deficiency judgment.  Also,  not only is the investor not diversified as to asset class, he is tied to a particular asset in a particular location.  For Chin, even if the New Haven or Connecticut market noms, its possible that local conditions, such as an increase in crime, a new highway, locations of a half-way house, etc., could depress Wooster Square prices. For example, its possible that denser development of Westville Village will depress prices of nearby duplex and single-family homes as spillover for the village impacts the bucolic nature and easy street parking on Alden, etc.

posted by: 1644 on February 15, 2018  10:44am

Notwithstanding the above, there are definite advantages to “homeownership”.  First, the owner cannot be evicted for lapse of time (because his lease ended), or for many other reasons.  So long as he makes his loan payments, pays his taxes, water & sewer fees, he can state forever (absent eminent domain).  Because he cannot be evicted, he can invest in his home to tailor it to his tastes, knowing that he can enjoy the changes as long as he wants.  So long as he complies with building and zoning codes, he can paint, remove and install walls,  remodel a kitchen, install central A/C, add or subtract structure, all to suit his particular desires confident that he will be able to enjoy his investment as long as he wants.

Given New Haven’s firefighter shortage, Chin is unlikely to have to move due to lay-off or the collapse of his employer.  For him, this is a good move.  For the city, its great that an emergency responder is local, and more of his pay will stay in the local economy than if he moved out of town.

posted by: Brian L. Jenkins on February 15, 2018  12:48pm

I wish to congratulate this young man on his first major financial investment. 

This young man grew up in NH, went to NH schools, works for the fire dept., and is now a home owner.  This is a great accomplishment for the entire city. 

I’ve had my quarrels with the NAACP, but I have to applaud them monumentally for assisting in making this homeownership acquisition a reality for the Chin family.  Great job Mrs. Dumas.

The question isn’t how the critics should feel about this, but instead, how does Mr. Chin feel about this?  That’s the question.

posted by: brownetowne on February 15, 2018  3:29pm

threefifth: I think your rent calculation is on the low side, but let’s just accept your analysis as is.  You’re right that the cost to purchase a $205K home over the course of 30yrs includes years of added interest payments and property taxes.  However, if you use this inflation calculator, the value of such a house purchased in 2018 would be $430K in the year 2048 based on inflation alone.

So, if we use your number and pay $584K over 30 years then once it’s paid off you would own property worth about $430K which is nice because it is an asset.  Isn’t it better to own something worth $430K as opposed to having paid $389K in rent over the course of 30 years?

posted by: 1644 on February 15, 2018  3:32pm

Brian, it’s great for Firefighter Chin.  Nonetheless, there were a lot of people ten and more years ago who bought the argument that housing prices can only go up, and were just as thrilled as the Chins at their closings.  Some had sub-prime loans, some had teaser rates or ballon payments, and some low or no down payment loans, and some had traditional 20% down loans.  Many saw their investment lead to great losses, often losses they could not absorb.  For example, three years ago, my brother paid $250K for a house in Westville which the sellers had paid $350K for pre-crash.  Today, it is appraised at $216K. There are thousands of similar examples throughout the city and state.  This program seems to have the needed checks to ensure folks don’t get in over their heads.  Those particulars are what seem really worth celebrating about this program.

posted by: THREEFIFTHS on February 15, 2018  4:39pm

posted by: brownetowne on February 15, 2018 2:29pm

So, if we use your number and pay $584K over 30 years then once it’s paid off you would own property worth about $430K which is nice because it is an asset.  Isn’t it better to own something worth $430K as opposed to having paid $389K in rent over the course of 30 years?

And what about the property tax you have to pay on that $430K as long as you own that property?. Property Tax goes up very rare down.Also like I said you can now only write off $10,000 a year off of your Property Tax.Again do the math in this day and time it is better to rent.Trust me.He will be stuck with that house or he will have to take a renter in.

posted by: Brian L. Jenkins on February 15, 2018  6:02pm

@ 1644,

You pose an extremely cogent argument.  However, it is my hope that the Chin’s entered into a deal that will bring them happiness and not misery. 

I don’t know the language that rests in his contract.  That’s why you hire a good attorney to sort all that out on your behalf.  But when I look at the young man’s face, he sure seems happy with the position that he’s in.  And that my friend makes me feel happy for him too.

posted by: 1644 on February 15, 2018  6:26pm

Browne:  His rents are way, way too low.  Plus, while one might find a landlord who wouldn’t raise the rent for five years, I cannot imagine one who wouldn’t raise for ten, let alone fifteen years.  The apartment I rented for $600 twenty years ago now goes for $1400/month.  Landlords’ taxes and insurance go up every year, so they will be passed on to tenants.  The renter should also carry renter’s insurance, as the landlord’s policy will only cover the structure.

posted by: 1644 on February 15, 2018  7:19pm

Brian:  I think he will do fine, so long as Harp doesn’t crash values with big tax increases and soft on crime policies.  Here’s a graph for New Haven values, which are way below peak, but trending slightly upward:
(Another horror story: friend bought house in Black Rock 2007, Put $40K down payment on $280K price.  Today’s appraised value: $180K.  She owes about $230K on her loan.

I think the NAACP and its partners have done all the can to set Chin up for success.  I wish him well.

posted by: JCFremont on February 16, 2018  9:42am

Homeownership also includes maintaining your own house and paying for such services. Renters call the landlord. When a landlord is restricted on the rents they charge first thing that they’ll “defer” will be maintenance costs. Interest free-forgivable loan great, where I just don’t want to see a return of the subprime loan scheme. Too many in government and the “activist” communities think that owning a home makes you “rich” so that they can continue to raise property taxes. Can a ANY firefighter or police officer apply for this money? After all don’t we want are civil servants to own homes in New Haven?