Home OwnershipSupplements

The Case for Middle Income Housing

The District of Columbia Housing Finance Agency (DCHFA) is the city’s exclusive financier of affordable housing providing both debt and equity to facilitate the production, rental, and purchase of affordable housing. A significant portion of our work facilitates homeownership through programs like the Home Purchase Assistance Program (HPAP), DC Open Doors, DC4Me and the Housing Investment Platform (HIP)Equity Fund.

Middle-income homebuyers are being squeezed out of the market. They are experiencing upward pressure from lower-income buyers with access to grants and income-restricted loans and properties. On the other end of the spectrum, market-rate buyers are exerting downward pressure through all cash offers and/or significant down payments from the sales proceeds of their existing homes. Over the past 60-90 days it has not been unusual to see homes sell for more than 10-20 percent of their list price. The middle — firefighters, teachers, nurses, EMTs, police officers, government employees and other entry-level white-collar professionals — are being pushed out. The people who educate our children, keep us safe and run our city cannot afford to live here.

Home purchase opportunities for families earning between 60to 120 percent of the Area Median Income ($77,400 and $154,800) are evaporating. The median home price over the last year, May 2020 thru May 2021, has hovered around $650,000 and a 20 percent down-payment of $130,000 is out of reach for many first-time homebuyers. Down-payment programs in tandem with mortgage programs that allow higher loans limits with lower interest rates are essential to providing buyers access to homeownership.

In the past, Washington, D.C. has had land resources to facilitate the production of middle-income housing, and this continues to happen at District Towns on St. Elizabeth’s East Campus (88 townhomes), plans for homes at the Fletcher-Johnson School site (80+) and through the DC Department of Housing and Community Development’s Vacant to Vibrant property dispositions to developers. These public resources do have a limit. And despite these limits, Mayor Bowser has charged her administration to identify creative ways to address this challenge.

DCHFA has committed itself to solving the problem of middle-income homeownership through a two-pronged strategy: production and financing. The agency’s HIP program has committed $5 Million dollars to invest in building affordable single-family homes. This investment creates less expensive capital for homebuilders and in exchange these builders can offer lower priced homes. To date, the program has delivered 30 town homes and has a pipeline of at least 50-100 more.

The second part of the strategy is the programs mentioned earlier, DC Open Doors, DC4Me, nd HPAP make homeownership more affordable through down payment assistance and higher loan limits than conventional loans. DC4ME specifically targets District government employees.

Homeownership has been the most frequent path to wealth building in our country: homeowners have a net worth of 80 times that of a renter. Equity built through homeownership can help pay for college, create a business, and be passed along to future generations. The agency believes that equal access to beautiful, healthy, and affordable housing is essential to a strong, vibrant, and diverse city with thriving neighborhoods. The agency will continue to facilitate its mission through investments and loan programs that make this happen.

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