Local, state and federal buying incentives calm consumers and communities

Robin SnydermanBy Robin Snyderman

Wall Street’s volatility – both sparked by and marked by unprecedented lending policies, record-high foreclosures, and the Fed’s takeover of stalwarts such as Fannie Mae and Freddie Mac – has some would-be home buyers running scared. Such a reaction not only is unfortunate, but also may be unnecessary: For those with solid credit ratings, this is a good time to buy, particularly if taking advantage of a growing catalog of local, state and federal home buying incentives.

The City of Chicago and the Partnership for New Communities, for example, recently announced the “Find Your Place in Chicago” campaign, which showcases 200 affordably priced homes for sale in 26 vibrant Chicago communities. All of the featured condos, single-families, two-flats and townhouses range in price from $150,000 to $450,000, are brand new or rehabbed with the latest amenities, and have been created or supported through city investment.

Through this campaign, meaningful financial incentives – including money for down payment and closing costs, free upgrades, and even a special mortgage that provides buyers a federal tax credit – make these homes even more affordable. With the support of the Partnership for New Communities, a coalition of business, civic, and foundation leaders supporting the Chicago Housing Authority Plan for Transformation, the first 100 buyers to purchase a home in one of the newest mixed-income developments will receive a $10,000 grant toward the purchase price.

These financial incentives also are attracting the attention of area employers interested in housing a competitive workforce. For example, the Illinois Institute of Technology is growing its employer-assisted housing (EAH) program to help its employees make the most of this new opportunity. Illinois Institute of Technology is one of more than 70 Chicago-area employers giving their workers down payment and closing cost assistance, plus free home-ownership counseling through this innovative benefit. Others include companies and institutions with well-established EAH programs, such as the University of Chicago, Chicago Public Schools and Mercy Hospital, as well as the recently launched Park National Bank program.

More than 1,500 home buyers have purchased homes with the help of their companies’ EAH programs since 2000. While the cash assistance is, of course, appreciated, participants seem to equally value the home buyer education and credit counseling, which is paid for by the employer but conducted confidentially by local nonprofit housing counseling agencies. The guidelines set by these programs (including interest-rate caps and preferred lender lists) help to ensure home buyers take a mortgage loan they can afford, accounting for the nearly zero-percent foreclosure rate of participating employees.

Looking forward, the federal government recently announced it will allocate more than $172 million in Neighborhood Stabilization Grants to Illinois for foreclosure recovery. The grants provide limited resources – enough to recover just a fraction of more than 30,000 properties foreclosed upon in metropolitan Chicago since 2007. Local policymakers responsible for allocating these dollars, including the Illinois Housing Development Authority and county agencies, must quickly devise plans to complete the acquisition, rehab or demolition, and resale of those properties within 18 months. The limited nature of these dollars demands strategic investments near transit, jobs and retail to build sustainable neighborhoods. This is good news for developers and employers, both of whom have been stung by the trend of affordable homes being located far from job centers.

People in the market for a new home should know this can be a good time to buy. Realtors, employers and community-based housing counselors can help them overcome their market jitters and take the step toward home ownership by pointing them to these and other great home buyer incentives.

Robin Snyderman is vice president of housing and community development for the Metropolitan Planning Council.

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