The deepening of the wealth gap and the expanding crisis in affordab le homeownership
The lead article in the NOV/DEC 2022 issue of AHF/Affordable Housing Finance focuses on an issue now coming to the forefront: The Missing Middle.
In the financial sector, the term refers to households eaming between 600/o and 120% of AMI, too much to qualify for subsidized housing and too little for market-rate communities. In the architectural and design sector. it broadly describes anything betweert single family homes and mid-rise multifamily buildings.Drive around Greater Miami, a metropolitan area with explosive growth and try to remember
how many “missing middle” buildings you have recently seen under construction. What is “missing” is both the financing sources for the completed buildings as much as the front-end funding for new and smaller builders and developers.
While encouraging to read, all projects featured in the AHF article described rental communities.
Not a single case study included any for-sale products.
In Miami, the CEG has for long advocated the need to bring to market different types of affordable, smaller, for-sale units, to allow lower-income families to build up family wealth and long-term financial independence, through what may be just about the only sure method: the
forced savings mechanism of monthly mortgage payments and home equity buildup.
The CEG has been working on such a new cutting-edge concept on our site in the Brownsville arca,54 condominium micro-units, in a 5-story building, to be sold at price points not now available in the marketplace. We are still facing numerous obstacles and the fate of the project is
still uncertain. If we are finally unable to push this project forward we will certainly try a similar concept … at a later time … in a different location.
We have often heard, from experienced and well-meaning developers, that condominium ownership for lower-income buyers is either naive, or unrealistic, or both. Other notable developers even affirm that homeownership for lower-income families, in itself, places an unfair
and heavy burden of responsibility on those families, and that they might be better served instead by enhanced rental assistance progftlms.
Precisely because we acknowledge the huge obstacles that we face, conceptual and financial, as well as yet unseen ones, we continue to brainstorm obstacles and impediments, without discouragement.
Among the solutions we are considering, the following sknd out:
Developing tenant-to-owner training prograrns to challenge future applioants to rise to their highest potontial and be prepared to live up to such a difficult transition Design rigorous screening and selection processes, to be able to reach out to the better-qualified and more highly motivated applicants Include early in-depth pre-ownership training on all aspects of the management of a condomidum association, through workshops inspired by the principles of Participatory Democracy, expanding the dimensions of their sense of both property and community
owuership Securing public-sector funding for a Safety Reserve Fund, to support the financial sustainability of all units owners, with access to back-up emergency support in cases of economic hardship
Naive … unrealistic ?
The Miami real estate market is littered with the remains of visionaries who were “too early” with their visions.
Mindful of risks and obstacles, the CEG will continue to lead this figtrt, to help bridge the wealth gap of so many who have been unfairly left behind, discarded on the edges of a prosperous community, with few opportunities and hopes to be able to earn for themselves their share of
The American Dream.