The Case for Habitat Homes

Why is Lakeshore Habitat for Humanity’s work so important?  Because homeownership transforms lives—and it is increasingly out of reach for many.

Learn more through a series of Evidence Briefs created by Habitat for Humanity International.

Evidence Brief 1: Who has access to homeownership?

In 2018, the U.S. Department of Housing and Urban Development estimated a need for 2.5 million additional housing units to meet long-term housing demand.

How Habitat helps

• Habitat affiliates expand housing inventory that is affordable to low-and moderate-income households.
• Habitat advocates at all levels of government for programs and policies that fund and stimulate new development and preservation of affordable housing.

Prices for more affordable homes (those affordable at 75% of the metro area median income [AMI] and below) have increased at nearly twice the rate of expensive homes (affordable at 125% of metro AMI and above).

How Habitat helps

Habitat partners with volunteers and Habitat homeowners and relies on efficient building methods, modest house sizes, and no-profit loans to keep costs low.

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Down payments, closing costs, and increases in mortgage interest rates put the price of home out of reach for many households.

How Habitat helps

• Habitat requires lower down payments, if any, and closing costs than standard lending practices
• Habitat offers low- or no-interest mortgages.

The tightening lending standards after the Great Recession (2007-09) was a key factor in declining homeownership rates.

How Habitat helps

• Habitat selects families based on level of need, residence in affiliate’s service area, willingness to partner with Habitat, and ability to repay an affordable mortgage.
• Habitat’s lending standards and terms are less subject to market fluctuations.

Foreclosure rates were lower among borrowers with safer and more affordable mortgages, regardless of race and ethnicity.

How Habitat helps

• Habitat provides affordable mortgages and low down payments to help homeowners avoid subprime mortgages and foreclosure.

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In addition to the key barriers faced by all potential homebuyers, racial and ethnic minorities face systematic inequities, including discriminatory housing policies and institutional barriers. As much as 17% of the homeownership gap cannot be explained by sociodemographic factors (e.g., income, age, family size, marital status, gender), and researchers hypothesize that the remaining gap may be explained by information networks, limited access to credit, discriminatory housing policies (e.g., redlining, racially restrictive covenants, and zoning policies) and other institutional barriers.

How Habitat helps

• Habitat serves a diverse base of homeowners.
• Habitat advocates for anti-racist housing and land-use policies.


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Evidence Brief 2: What are the benefits of homeownership?

Homeownership is a catalyst to wealth building.
• U.S. homeowners have an average net wealth that is 400% higher than that of renters with similar demographics and earnings, and home equity represents the largest proportion of wealth (34.5%) for U.S. households.
• Each year of homeownership tends to be associated with an additional $9,500 in net wealth, on average.
• In 2019, net wealth was lower for lower-income ($9,300), Black ($24,100), and Hispanic/Latinx households ($36,050) than for higher-income ($1,589,300) and white households ($189,100). Home equity represented a larger share of net wealth for low-income households and Black and Hispanic/Latinx households.


How Habitat helps

• Habitat partners with families to lower barriers to affordable homeownership.
• Habitat focuses on working with low- and moderate-income homeowners.

Homeownership leads to better test scores and higher rates of high school graduation and college attendance.
• Children of low-income homeowners are 11% more likely to graduate from high school and 4.5% more likely to complete post-secondary education than children of low-income renters.
• Homeowners can leverage their housing wealth to finance post-secondary education for their children. A $10,000 increase in housing wealth raises the probability of college attendance by 14%.


How Habitat helps

• Habitat helps families with children access homeownership.
• Habitat offers families stability through shelter, which benefits children through consistency in schooling and minimized disruptions to their education.

Homeownership promotes civic and social engagement, regardless of the income level.
• Homeowners are more likely to vote in local elections than renters in comparable neighborhoods.
• Homeowners are 1.3 times more likely to become involved in a neighborhood group and to join a civic association than renters.
• Low- and moderate-income homeowners have more social capital resources, such as a larger social network.


How Habitat helps

Habitat requires future homeowners to contribute a total of 250 “sweat equity” volunteer hours on build sites for other homeowners as well as on their own home build. This investment by families in both their home and their neighbors’ homes helps contribute to a sense of community among homeowners.

Decent, affordable housing improves physical and mental health.
• Homeowners are more likely to occupy homes with fewer repair needs than renter households.
• The CDC identified home improvement as one of six evidence-based, high-impact solutions for addressing social determinants of health.
• Decreasing housing costs for cost-burdened households releases resources to spend on nutritious food and health care.


How Habitat helps

• Habitat lowers the cost of homeownership and makes it easier for future homeowners to access quality housing.
• Habitat’s repair programs help homeowners address acute housing problems and improve the quality of their homes.

Affordable, sustainable homes reduce energy consumption.
• Newer homes have greater energy efficiency than older homes. As of 2015, 17% of single-family homes built before 1980 lacked proper insulation, 21% of homes had heating systems at least 20 years old, and only 11% had received an energy audit.
• Low-income households have higher energy burdens, spending three times the share of their annual income (7.2%) on energy costs as compared with other households (2.3%).


How Habitat helps

• Habitat builds new homes sustainably, using green building techniques.
• Habitat’s energy-efficient designs and repairs lead to financial savings for homeowners.

In addition to the key barriers faced by all potential homebuyers, racial and ethnic minorities face systematic inequities, including discriminatory housing policies and institutional barriers. As much as 17% of the homeownership gap cannot be explained by sociodemographic factors (e.g., income, age, family size, marital status, gender), and researchers hypothesize that the remaining gap may be explained by information networks, limited access to credit, discriminatory housing policies (e.g., redlining, racially restrictive covenants, and zoning policies) and other institutional barriers.

How Habitat helps

• Habitat serves a diverse base of homeowners.
• Habitat advocates for anti-racist housing and land-use policies.

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Evidence Brief 3: How does Habitat homeownership contribute to wealth building?

For low-income households and households of color, homeownership can be a catalyst to wealth building—in the right scenario.
Homeownership promotes wealth building by acting as a forced savings mechanism and through home value appreciation.

How Habitat helps

• Habitat affiliates help homeowners build equity by keeping the cost of homeownership affordable. Habitat is committed to ensuring mortgage payments consume no more than 30% of a homeowner’s income.
• Habitat affiliates also provide financial education classes and pre- and post-purchase counseling that provide tools and strategies to manage household finances.

Single women pay approximately 1%-2% more for comparable properties than single men, and then they sell these homes for 2%-3% less.

How Habitat helps

• Habitat homes are priced at fair market value and are not subject to the negotiating ability of the homebuyer or any implicit bias or prejudice on the part of their real estate agent.
• Mortgage payments for Habitat homes are kept at 30% of the homeowner’s monthly income. This model ensures that Habitat homes are affordable regardless of gender and protects women from paying higher costs for their homes.

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The homeownership rate of white households continues to exceed those of Black and Hispanic/Latinx households. And Black and Hispanic/Latinx homebuyers face key barriers that may impact their ability to build equity.

How Habitat helps

• Habitat serves a diverse range of homeowners, providing more equitable access to low-cost financing that can help support building home equity.
• The counseling and classes offered by Habitat affiliates can help [ . . .] better position [homeowners] to sustain homeownership.


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Will you help us?

At Lakeshore Habitat, we want everyone to have an affordable place to call home.

Donate Now

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