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PILOT PROGRAM TO PROMOTE HOME OWNERSHIP AMONG SLUM RESIDENT
a NY)
THe desire to own a home is a basic part of our tradition, Today 62% of American —\
achieved that desire. Yet there are still millions of families who would like to own their own
homes, but cannot. They are too poor to do so under present financing arrangements. At least
half a million such households now rent substandard housing in our metropolitan areas. A chance
to own a decent home of their own might have a profound effect upon their attitudes toward
society, Instead of feeling like frustrated and helpless transients floating along in the poverty
and filth of the slums, they could begin developing a sense of control over their own destiny.
They could gradually build a stake in their communities, and would leam how to use and benefit
from legal and political institutions they now regard with hostility.
Furthermore, providing these low-income households with home-ownership assistance would merely
be giving them the same advantage we already extend to millions of middle-income and upper-
income households. These households now receive a large subsidy in the form of federal income
tax deductions for the interest and property taxes paid on their homes. This subsidy amounts fo at
least $1.7 billion per year for just the wealthiest 20% of our families. This is double the housing
subsidy we extend fo the poorest 20% in the form of all public housing payments, welfare payments,
and tax deductions combined. Clearly, tax deductions aren't much help to families with little or
no taxable income. So simple justice demands that we encourage home ownership for them in some
other way more suited to their needs.
Therefore, we recommend enactment of a pilot program of aid to low-income families to help them
achieve home ownership. This program should concentrate upon slum dwellers because they now
have the least opportunity to own decent homes, and because it would help improve sium living
conditions in general. The program should assist slum residents either to move out of slums by
buying homes elsewhere, or to acquire ownership of newly rehabilitated units in neighborhoods
: which are being up-graded through a wide variety of other programs too -- as in the Model
)\ Cities Program. This home-ownership programwouldhelp low-income families buy single family
\/\ houses, individual units in multi-family condominiums, or apartment buildings which they
\ \ operated as resident landlords -- replacing absentee landlords who had neglected their
\ Rene
\/ Several types of aid would be involved in this program. First, the slum housing units invoived
would be substandard ones rehabilitated by a public agency or a non=profit group before being
sold-to new owners. Second, below-market-rate loans should be used to finance owners on a
no=downpayment basis. Third, potential owners should receive advanced training in the skills
of minor maintenance, financing, and other responsibilities of ownership. Fourth, new owners
from the lowest-income groups would need a monthly housing supplement similar to the rent
supplement, but applicable to ownership payments. Fifth, some tenants in resident=-landlord
buildings would receive rent supplements. Sixth, owners should receive follow-on counseling
about financing and repairs. Seventh, the public agency running the program would agree to
buy back the housing involved during a fixed period in case the owners could not carry the
required burdens,
As S e , r :
A Pilot Program to Promote Home Ownership Among Slum Residents
Page 2
A pilot program incorporating these devices could be undertaken for 10,000 units at an annual
cost of about $5.1 million for rent and ownership subsidies, plus a reservation of $125 million in
below-market-rate (3%) loan funds, plus administrative costs. These figures assume that owner-
ship opportunities would be extended to even the lowest-income families.
This program would improve the life of slum residents in several ways besides allowing them to
become home-owners. Many would take much befter care of their properties and develop a
stronger interest in good neighborhoods. Even landlord-tenani relations might improve because
resident landlords would replace absentees. Hence conditions in slums might be significantly
improved even for people not involved in the program.
In our opinion, this is a program solidly in the American tradition, and well worth trying.