Media Coverage

Neighborhoods group helps overcome home-buying hurdles

Northwest Life: Seattle Times

Sunday, March 14, 2004

By Elizabeth Rhodes
Seattle Times staff reporter

Lots of people want to buy a house and can't — that's generally acknowledged. What's less well-known is what can be done about it.

Would it surprise you to know some first-time buyers may qualify for up to $62,000 in purchase assistance?

That's among the solutions available in the Puget Sound area, according to the Community Home Ownership Center, which recently released a report exploring the obstacles and opportunities facing this state's first-time home buyers. "In the bigger picture, people would be earning more of a living wage and home prices would be more in line with salaries. That's not the reality," says Amy Duggan, CHOC's executive director.

The nonprofit organization's goal is to increase and preserve homeownership for low- and moderate-income state residents, which it does in part by acting as a clearinghouse for home-buyer information.

Duggan considers the obstacles to ownership "quite significant" for those earning 80 percent or less of the median income. In King County that 80 percent equates to $51,750 for a family of three. But income isn't the whole story. Language barriers, credit issues, discrimination and lack of a down payment also are major factors.

While not much can be done — at least by affordable-housing advocates — to raise wages, all the other problems may be solvable, Duggan says. The report's findings come from a survey completed by 630 prospective home buyers who attended one of the Washington State Housing Finance Commission's free, five-hour home-buyer education classes.

Among the key findings:

• Some 70 percent of those earning $39,000 or less reported that lack of down payment was an obstacle. However, more income did not make the problem go away, as 58 percent of those earning $50,000 or more reported the same problem.

• Poor credit is a major obstacle to ownership, and a credit history marked by consistent late payments and debt collections can effectively delay home purchase by up to two years.

• In general, the lower the potential buyers' income, the more their credit was an obstacle.

• Three-quarters of the African Americans polled said the credit issues were a barrier to ownership, compared to 59 percent of Asian/Pacific Islanders, 51 percent of Hispanics, 42 percent of Caucasians and 41 percent of American Indians.

• When it came to buying a home, four-fifths of those polled said home-buyer education was the most helpful resource, because it made them more knowledgeable about the process and the resources available. According to Duggan, buyer education also has been shown to help avoid predatory high-interest lenders and prevent mortgage default.

Also a big plus was getting information about down-payment assistance programs. Thirty-one percent of those polled who purchased a home utilized aid. There are "quite a few" assistance programs out there, Duggan reports. "Some are statewide grants, some are city grants and some are private nonprofit programs."

There also are special programs for union members, city employees, teachers and others.

Duggan calls the Delridge Affordable Homebuyer Initiative one of the most innovative. This year the initiative will make it possible for 10 households to purchase a house of their choice in West Seattle's Delridge neighborhood. To qualify, they must be earning 80 percent or less of median income. The Delridge group is unique in that it buys and owns the land under the house — up to a cost of $62,000 — allowing the purchaser to pay a reduced price for the house alone. The home can be sold in the future, at a profit, to another low- or moderate-income buyer. The land stays with the Delridge group.

CHOC has information on this program and others, including credit counseling aid. It can be reached at 800-317-2918 or www.homeownership-wa.org.