Massachusetts is undertaking a massive shift in how it distributes money for affordable housing, pumping tens of millions of state dollars into building new owner-occupied homes after years of focusing almost exclusively on rentals.
The efforts, led by a new program to build homes for below-market sale in Boston and other cities, are an explicit recognition of the enormous racial wealth gap in Massachusetts, which has been fueled by a similar chasm in who owns homes here. Yet the program’s limits also illustrate just how hard that gap will be to close.
At an event this month in Haverhill to highlight the effort, Governor Charlie Baker pitched his plan as one way to remedy decades of US housing policy that created the divide, and said he wants to spend as much as $560 million to boost homeownership among historically disadvantaged groups in Massachusetts, particularly Black and Latino families. His goal is to jump-start progress with a huge windfall of cash from stimulus funding and other sources.
“One of the best and most effective ways you can build wealth is through homeownership, and the data has shown time and time again that people of color have not had the same access to federal programs that whites have had,” Baker said. “We have an opportunity to do something about that. We should do it with this funding. And we should do it now.”
For generations, people of color were excluded from federal funding for homeownership, while many of their white counterparts qualified for government subsidies. In modern-day Massachusetts, where home prices have more than doubled over the last two decades, that means the people who possess a golden ticket — a home that they own — are overwhelmingly white.
And people like Arlene Cribbs are locked out.
Cribbs, a 54-year-old who grew up in Boston and works as an emergency department technician at Brigham and Women’s Hospital, has completed a first-time homebuyers class, saved up a down payment, and received pre-approval letters from a bank. But there are very few homes available in her price range, up to $400,000, and those that are available are overwhelmed with applicants. She has been frustrated the programs aimed at helping her buy a market-value house don’t address that reality.
“It’s definitely not affordable for the Black community in Boston,” said Cribbs, who is Black. Her parents didn’t own their home. She sees buying as an investment in her whole family: She cares for her elderly parents, and her daughter and grandchildren currently live in a shelter.
The state’s new home construction program, known as CommonWealth Builder, is not explicitly race-based. But it is focused on Boston and the state’s 26 “Gateway Cities” — places that often have large populations of Black and Latino people, who own homes at lower rates than whites, and where lower home sale prices can make new development hard to finance, because construction costs are nearly high as they are in pricey markets like Boston.
Homes in the program are built by private developers who get up to $150,000 per unit in state subsidy, with the condition that they sell at a lower price, typically tied to the buyer’s income and household size. At a project planned in Everett, for instance, three townhouses would be set at $235,000 for a family of three that earns up to $100,100 a year, a price far less than similar market-rate units.
The state’s push to improve prospects for buyers like Cribbs is among the most ambitious in the nation, observers say. But even under the rosiest of projections, the program would finance about 2,000 new homes — far fewer than what would be needed to close the vast homeownership gap in a state where 70 percent of white households own their homes while just 36 percent of Black households do.
Nonetheless, backers of the plan say it is a meaningful step forward. It will be life-changing for the families who get homes through the program. And it could boost investment in Gateway Cities such as Brockton and Lowell, where moderate-income homebuyers have flocked in recent years.
“This isn’t a small problem that just happened,” said Chrystal Kornegay, executive director of MassHousing, the quasi-public financing agency that is overseeing the CommonWealth Builder program. “We’re not going to solve it by just having one tweak.”
The program launched in 2019, using $60 million that the state recovered from its investment in General Electric’s never-built Fort Point headquarters. It took MassHousing two years to develop a pipeline of projects that would qualify, and this month the agency unveiled plans for the first of those: 23 homes in Everett, Haverhill, and Boston, subsidized with $3.4 million from the state.
Baker has much bigger aims, proposing last week to devote $200 million in federal pandemic relief money to the program, and $300 million more to help lower-income homebuyers with down payments and other costs. The fate of that money is uncertain, with legislative leaders saying that they — not Baker — will decide how the vast majority of the federal dollars are ultimately spent.
Either way, the homeownership push could create a blueprint for how Massachusetts and other states spend housing money that may come in a federal infrastructure package, according to Chris Herbert, managing director of the Harvard Joint Center for Housing Studies.
Ever since the foreclosure crisis of the late 2000s, federal and state affordable housing programs have focused largely on producing rental housing, Herbert said. That has helped to finance thousands of new apartments, but done little to help residents build the wealth that often comes from owning.
And it has led to widespread frustration among some of those it was supposed to help.
“We’ve been like a broken record: We’re doing rental housing, we’re doing rental housing,” said Leslie Reid, CEO of the Madison Park Development Corporation, an affordable housing nonprofit in Roxbury. “And people kept saying ... ‘We would like to be homeowners.’”
Madison Park is now working with CommonWealth Builders to fund 20 units for purchase in Roxbury. It’s a slow process; the units may not be ready for three years. But once the construction pipeline opens, more and more homes will come onto the market, Reid said.
Even those will have their limitations. People who buy homes through the program must sell them for an equally affordable price if they leave within 15 to 30 years, depending on where the homes are. The purpose is to keep the homes accessible to others who have also been left out of the housing market. But that’s a difficult proposition, because it means people who buy CommonWealth Builder homes likely won’t see the benefit of rising homes values nearly as much as owners of traditional market-rate housing.
And that’s a turnoff for some.
Ycelso Herrera, a maintenance worker who lives in Jamaica Plain, says he isn’t interested in buying a house with deed restrictions, though most others are out of his price range. The whole point of his quest is to own an asset that can support him down the line.
“I can be able to get some money out of the house,” he said, “when I decide to retire.”
Matt Stout of the Globe staff contributed to this report.