Barriers to Homeownership and How Habitat is Responding

Homeownership can transform lives.  It creates long-lasting and life-changing impacts on families and communities. Here at Habitat for Humanity, we are dedicated to breaking down the barriers to homeownership that many community members face. The U.S. Census Bureau announced the following residential vacancies and homeownership statistics for the third quarter of 2023: homeownership rate: 66%, and homeownership vacancy rate: .08% (Census.gov). Our mission is to construct new and affordable housing while rehabilitating the current affordable housing stock. With increased access to homeownership comes many communal benefits, including financial stability, health and educational outcomes, access to jobs, increased community and social interaction, and more. 

Through a series of evidence briefs, Habitat is bringing to light research on the impact that affordable housing has on individuals and families in the U.S. at home and beyond. 

Top Five Barriers to Homeownership

The existing housing inventory does not meet current demand, particularly for lower-priced homes. 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 (HFHI). The rising costs of land, labor, and materials limit homebuilding and target most new construction at higher price points. The top five barriers to housing are:

1.  Rising home prices

2. Lack of funding for down payment or closing costs

3. Existing debt

4. Limited options within a budget

5. Poor credit history

With these barriers in mind, Habitat works to alleviate the strenuous cost of housing and provide equal access to this essential resource. 

How Habitat is Responding 

Habitat affiliates expand the housing inventory in their communities to be affordable to low- and moderate-income households by building new homes and rehabilitating and repairing existing homes. We work to provide a much-needed affordable housing stock, which has been neglected by standard residential construction. As a rule, Habitat homes are priced at fair market value. Homes are priced as if they were sold under prevailing market conditions. Habitat advocates for public policies on land acquisition, use, and development to lower the cost of homebuilding. We require lower down payments if any, and lower closing costs than standard lending practices. These down payments can often be paid through flexible arrangements. Habitat offers low or no-interest mortgages, making financing costs significantly lower than market rates. We work to help families access affordable loan products such as the U.S. Department of Agriculture’s 502 Direct Loan program. Everything we do here at Habitat for Humanity is for the good of the community; we work to alleviate financial barriers and provide community members with a safe place to call home while building with sustainability and affordability in mind.

 The Outcomes of Homeownership

Improving affordable homeownership leads to numerous outcomes that extend beyond the home​​​​​. In the U.S., these include greater economic stability, access to quality education, increased civic and social engagement, better health, and a reduced environmental footprint. When the burden of overwhelming housing costs is alleviated, it opens the door to success in all aspects of life. Homeownership is associated with generational wealth. Research has shown a correlation between homeownership and increased wealth over time, with each year of homeownership tending to be associated with an additional $9,500 in net wealth (HFHI). Homeownership leads to better test scores, higher high school graduation rates, and college attendance, especially among children of low-income homeowners (HFHI). Decent, affordable housing improves physical and mental health. Decreasing housing costs for cost-burdened households (those spending more than half of their household expenditures on housing) releases resources to spend on nutritious food and health care. It limits overcrowding to minimize the spread of respiratory infectious diseases (HFHI). Affordable, sustainable homes reduce energy consumption, diminishing the energy burden for low-income households. Access to affordable homeownership unlocks the door to a better quality of life.

To learn more about how Habitat is responding to the barriers to homeownership, please read the full Evidence Brief from Habitat for Humanity International.

Additional Sources:

https://www.habitat.org/our-work/impact/research-series-outcomes-associated-with-homeownership 

https://www.census.gov/housing/hvs/files/currenthvspress.pdf