HOMEOWNERSHIP FOR STRONGER NEIGHBORHOODS STATEWIDE A Report of the Maryland Sustainable Growth Commission’s Neighborhood Stabilization & Homeownership Workgroup January 26, 2015
Request from Speaker Busch March 19, 2014 letter requested that the Commission convene a broad group of stakeholders to: “… study the impact of the financial crisis on historically owner-occupied neighborhoods and to identify resources and strategies and recommendations to preserve the stability of historically owner-occupied neighborhoods and promote homeownership in these neighborhoods .”
NSHO Workgroup Members Co-Chairs: Clarence Snuggs, former DHCD Acting Secretary Hon. Steve Lafferty, Delegate Maryland General Assembly Members: 18 leaders from real estate, lending, nonprofit and for profit development, and legal communities and the public sector, representing a rural, suburban and urban balance.
Core Underlying Drivers • Homeownership is a critical tool for stabilizing and revitalizing neighborhoods • Homeownership is not for everyone, but where sustainable, it is an important asset building vehicle • The Great Recession and housing downturn set back prior gains in equity and homeownership • Recovery is occurring but is uneven across Maryland
NSHO Workgroup Process August through December 2015: • Six Workgroup meetings • One sub-group focused on national regulatory and other issues external to Maryland • Four focus group meetings with real estate agents, lenders, housing counselors, housing developers and public sector housing leaders • Research on housing trends from 2000 to 2013 • Review of current tools available in DHCD tool box • Review of Best Practices in MD and beyond
Research Highlights: • Homeownership still matters. • Even with the housing bubble and subsequent downturn, homeowners on build more assets than those households that rent.
Owner Occupancy Rate, 2000-2013 Research Highlights: 76.0% • Homeownership rates are gradually returning to pre- 74.0% 74.4% bubble levels. 73.6% 72.0% 72.3% 71.7% 71.7% 70.0% 70.5% 70.5% 69.9% 68.9% 68.0% 68.6% 67.7% 67.3% 66.0% 66.5% 65.9% 65.9% 64.0% 63.5% 62.0% Source: The Reinvestment 60.0% Fund (TRF), Owner occupancy rate changes from 58.0% 2000 to 2013 . 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 Maryland Delaware Pennsylvania United States
Average Tract Median Sales Price (2013 Dollars) Research Highlights: $800,000 • Median sales prices as of $706,546 $700,000 2013 have climbed to $631,074 slightly higher than 2000. $585,874 • $600,000 Houses in lower-priced $552,515 markets have not seen the $516,145 $511,010 $508,125 same level of price “regain” $500,000 $454,533 $440,916 $438,957 of the middle- and higher- priced markets. $400,000 $361,565 $346,047 • Lower-priced markets are $316,158 $308,968 $301,220 home to larger $300,000 $273,381 $259,388 $254,199 concentrations of lower- $231,837 $215,634 income and minority $197,268 $178,500 $200,000 $174,276 $166,255 households $126,875 Source: TRF , Changes in $100,000 median home sales prices from 2001 to 2013, across lower-, middle- and higher-priced $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 housing markets. Lower-Priced Markets Middle-Priced Markets State of Maryland Higher-Priced Markets
Inventory of Loans in Foreclosure by Quarter, 2006 (Q3) - 2014 (Q3) Research Highlights: 6.0 • Foreclosure is still a factor in Maryland. 4.93 5.0 • Inventory of older defaulted 4.63 4.27 loans is making its way 4.29 4.22 4.02 3.96 3.85 3.85 through the foreclosure 4.0 Percent of All Loans (NSA) 3.48 process, but is lower than 3.39 3.36 3.33 3.22 3.04 2012 peak. 2.94 2.83 3.0 2.71 2.39 2.0 1.60 1.55 1.05 1.0 Source: TRF , Changes in 0.46 inventory of loans in 0.0 foreclosure, 2006 through 2014. Year / Quarter PA DE MD US
Average Tract Percent FHA Loans - Urban Tracts Research Highlights: 70.0% • FHA insured loans are a significant share of the 58.0% 60.0% market in urbanized areas, especially in Census tracts 54.8% 50.0% with higher-owner 45.0% 43.1% occupancy but lower than 39.2% median home values. 40.0% 35.9% • 32.9% Recent announcement by 29.3% Obama Administration to 30.0% 24.3% lower FHA fees may be of 20.4% assistance. 20.0% Source: TRF , Trends in 10.0% 5.9% average percentage of FHA loans in urban Census tracts, 1.4% 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 relative to owner-occupancy 3.00 Urban, Low Ownocc, Low Value 6.00 Urban, High Ownocc, Low Value 9.00 Urban, Low Ownocc, High Value and home values. 12.00 Urban, High Ownocc, High Value State of Maryland
Median Sales Price (2013 Dollars) - Sustainable Communities Research Highlights: Designation • Throughout the study $450,000 period, Maryland’s $414,578 $401,724 $400,000 designated Sustainable $376,469 $385,917 Community Areas (SCAs) $347,832 $350,000 $324,333 exhibited lower sale prices $322,104 $310,087 $300,871 than the remainder of the $323,914 $287,057 $300,000 $282,826 $278,237 $273,543 $271,294 $298,825 state. $257,576 $238,076 $250,000 $235,062 $265,465 • Overall rise of sales prices $259,606 $219,473 $218,974 $203,170 in SCAs was 28%, which is $194,767 $191,749 $200,000 $184,418 $183,115 $204,080 $172,751 reasonably similar to 31% $159,384 $144,010 in non-designated areas. $150,000 $100,000 Source: TRF , Trends in median sales prices in $50,000 designated Sustainable Community Areas, 2001 to $0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013. Not Designated Sustainable Community Sustainable Community State of Maryland
NSHO Workgroup Recommendations Four overarching focus areas : • Financial Tools & Partnership • Consumer Education & Outreach • Capacity Building • Advocacy & Legislation
NSHO Workgroup Recommendations Goals: Financial Tools & Partnership #1 – Create innovative residential financing tools and incentives to encourage households, developers and lenders to investment in neighborhoods targeted for revitalization. #2 – The State should maintain and enhance its innovative “tool kit” of neighborhood revitalization programs. #3 – Expand partnerships between private-sector lenders, DHCD and other stakeholders to expand innovative mortgage lending practices to increase homeownership investment in designated Sustainable Communities.
NSHO Workgroup Recommendations Goals: Consumer Education & Outreach #4 – Expand access to high-quality objective financial education beginning in school and into adulthood. #5 – Expand outreach and education about state and local programs with homeownership incentives. #6 – Expand outreach to real estate agents about incentives that are available for home buying and selling in targeted revitalization areas.
NSHO Workgroup Recommendations Goal: Capacity Building #7 – Build the capacity of nonprofit developers and for-profit developers and their contractors to expand homeownership investment in targeted revitalization areas.
NSHO Workgroup Recommendations Goal: Advocacy & Legislation #8 – A policy-oriented group of stakeholders from the public and private sector should meet regularly to determine how they might advocate jointly for issues that encourage homeownership and neighborhood stability
NSHO Workgroup Recommendations Potential Legislation : • Increased flexibility for DHCD to utilize its mortgage lending and downpayment assistance programs in Sustainable Community (SC) areas • Enhancement of the Neighborhood Conservation Act of 2012 to include a state incentives to match local property tax incentives in (SC) areas • Requirement for financial education courses, K thru 12, in public schools statewide • Establishment of an ongoing advisory NSHO policy group staffed by DHCD
NSHO Workgroup Recommendations Other priority recommendations for DHCD: • Develop “purchase/rehab” and “rehab” lending tools to sustain and attract homeowners with choices to areas with older housing stock. • Utilize the Maryland Housing Fund in innovative ways to attract private investment in homeownership and rehab in weaker markets.
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