The Philadelphia Urban Affairs Coalition’s HomeBuyNow program analyzed 350 mortgages facilitated by matching grants and employer-assisted housing programs in Philadelphia.
Noting the research vacuum, Philadelphia’s HomeBuyNow program manager Christopher Waters analyzed 350 home sales financed using EAH programs and HBN matching grants. The city of Philadelphia funds HBN’s grants.
Waters says he thinks the results support EAH programs in Philadelphia and other cities.
Liz Hersh, who heads the Housing Alliance of Pennsylvania, says the results should encourage the continuation and expansion of such initiatives elsewhere as cities like York and Harrisburg launch programs.
Post-recession limits on government funding also have made quantitative validation increasingly critical, Hersh says.
“Any kind of evidence or data … is just invaluable,” she says. “So much of what we’ve done for so many years has been taken on faith.”
Here’s what Waters found:
$3.1 million has been invested by the city since 2004. That’s 44 EAH programs and $77 million worth of home purchases.
Those homeowners have paid more than $4 million in local property and real estate transfer taxes since 2004.
Eighty percent of the time, the city of Philadelphia instantly recouped its mortgage subsidy through the real estate transfer tax because the city’s average contribution fell below its $6,000 average transfer tax.
If there wasn’t a transfer tax, it would take just over a year for the city to get its money back through property taxes only.
Thirty percent of buyers said they wouldn’t have purchased homes without an EAH incentive.
More than half of buyers were minorities, younger than 35 and/or low-income.
Waters also found 91 percent of people have stayed in their homes past the forgivable loan period, which typically ran no longer than five years. The average person moves every five or six years, he says.
“We wanted to prove to the city … this stabilizes neighborhoods,” Waters says.
Waters says he did not include homebuyers who used EAH money only, and did not get matching funds from the city, because he couldn’t get cost-benefit information from companies.
He’s recommending that HBN’s parent Urban Affairs Coalition develop a cost-benefit metric for companies.
The full report is available on HBN’s website.