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Just Released: Study of Homebuyer Activity through the HOME Investment Partnerships Program

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Increasing homeownership - particularly among low-income
and minority households - is one of HUD's six short-term
and long-term strategic goals.  The Home Investment
Partnerships Program (HOME) is one of the key funding
sources available to support HUD's homeownership goals.

But how effective is HOME as a vehicle for increasing
homeownership opportunities for low-income households?

A recent study commissioned by HUD's Office of Policy
Development and Research (PD&R) focuses on the use of the
HOME program to support homeownership. Although HUD is
able to track the broad uses of HOME funds by
participating jurisdictions (PJs), little information has
thus far been available about the design of homebuyer
programs or reasons why PJs choose to use their HOME
funds for certain purposes.

There were multiple objectives to this study.  First, the
authors set out to document changes in the use of HOME
funds for eligible activities over time.  Second, they
intended to describe homebuyer activities funded through
the HOME program, including financing, subsidy, pricing,
counseling, and other strategies.  Third, the researchers
wanted to describe the reasons PJs elect to support
different eligible activities with HOME funds, choose
different strategies to support homeownership, and change
their use of HOME funds and homeownership strategies over
time.  Finally, the authors aimed to explore the
relationship between homeownership subsidy type and
amount and the type, location, cost, and affordability of
housing purchased.

The study's authors analyzed four sources of data to
formulate their conclusions.  Administrative data about
the use of HOME funds from HUD's Integrated Disbursement
and Information System (IDIS) were analyzed to identify
changes in the types of eligible activities funded since
program inception.  A mail survey of 551 PJs was
conducted to gather detailed information about approaches
their organizations used to promote homeownership through
the HOME program.  Third, semi-structured interviews with
staff at 60 PJs were conducted to examine the types of
activities funded with HOME dollars, changes in their
homebuyer program over time, and reasons for these
changes. Lastly detailed information on more than 1,200
HOME-assisted homebuyers was also collected.

A total of $3.1 billion in HOME funds have been committed
for homebuyer activity, assisting approximately 270,000
homebuyer units since 1990.  PJs use HOME to fund a wide
variety of homebuyer programs such as direct assistance
programs, development assistance programs, and joint
direct and development assistance programs. However, PJ
staff felt that direct assistance offered the most cost-
effective way to assist low-income households to make a
purchase. Meanwhile, a majority of both direct assistance
and development programs make use of other subsidies in
addition to HOME funding.

The majority of homebuyer programs do not include
additional income targeting beyond those required by the
HOME program (assisted households must have incomes at or
below 80 percent of area median income). The overwhelming
majority of programs are either restricted (50 percent of
all programs) or targeted (39 percent of all programs) to
first-time homebuyers. Generally, buyers moved to
neighborhoods with higher home values, higher median
incomes, and somewhat higher homeownership rates than the
areas where they had previously lived. Available
information also suggests HOME-assisted buyers are
successful at maintaining homeownership, with reported
foreclosure rates and sales rates below average for low-
income homeowners.


"Study of Homebuyer Activity through the HOME Investment
Partnerships Program" is available for download from HUD
USER at
https://www.huduser.gov/portal/publications/hsgfin/homebuy.html
or in printed form for a nominal charge by
calling HUD USER at 1-800-245-2691.
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