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Mass. is spending big to boost homeownership. What happens when the money dries up?

Both the state and Boston have poured COVID relief funds into programs to help tackle the rising costs of housing. Now some are wondering if the programs are sustainable.

Jasmine Toussaint at her new home in Haverhill.Jonathan Wiggs/Globe Staff

She had to move about 30 miles from Boston, but Jasmine Toussaint is at last a homeowner.

A longtime resident of the city, Toussaint, 40, had for the better part of five years fruitlessly scoured the Boston area for anything in her price range. Then, at the beginning of 2022, her luck turned.

She got a better-paying job. Her student loans were forgiven through a federal public service program. And crucially, she received a $38,000 grant from a state-backed housing agency to use toward a down payment on the newly constructed townhouse in Haverhill that she now calls home.

“It has changed a lot for me,” said Toussaint, who works for the educational equity initiative Campus Without Walls. “I’m the first person in my family to buy a house. It feels like I’ve been lucky enough to unlock a better future for myself.”

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But in the state’s frenetic housing market, stories like Toussaint’s are about more than good fortune: they also speak to the success of government programs aimed at helping people clear the increasingly insurmountable hurdles to becoming a homeowner. In her case, Toussaint was one of roughly 1,600 people who were on track at the end of 2022 to receive homebuying grants through a program known as MassDREAMS, which was financed with some of the billions the state received from the federal pandemic relief law known as the American Rescue Plan Act.

In total, the city and state together have directed more than $100 million toward down-payment and mortgage-assistance programs, and another $550 million or so to affordable housing development, initiatives that have helped thousands of people find permanent homes.

But those federal funds are set to dry up in 2024, which would leave homeownership programs like MassDREAMS, now seen by advocates as crucial aid initiatives, high and dry. And the same advocates and program administrators who have witnessed firsthand the success of the initiatives are lobbying the state to continue funding them, given the enormous stockpile of money on Beacon Hill, such as the nearly $2 billion in remaining ARPA funds and the record $6.9 billion accrued in the state’s rainy day fund.

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It’s a pivotal choice, they say: Keep funding these programs with money the state has on hand, or watch them fizzle out.

“The beauty of the ARPA money is that we’ve been able to spend it on some programs that we’ve been thinking about for a while but just haven’t had the resources for,” said Chrystal Kornegay, executive director of MassHousing, one of two quasi-state agencies that run MassDREAMS. “The downside is that we’ve now been able to see how much demand there is for homeownership assistance, but might not have the money to keep providing it.”

Access to homeownership in Greater Boston has been an issue for decades. Rising housing costs and, more recently, surging interest rates have made owning a home ever harder, particularly for lower- and moderate-income residents. And at 60.5 percent, the homeownership rate in the region lags the national average of 66 percent; in Boston itself just 35 percent of residents own their home.

That longstanding dynamic accelerated during the pandemic, first when waves of layoffs destabilized thousands of households, and then more dramatically when the housing prices went into hyperdrive in 2021.

City and state officials saw ARPA, signed into law in March 2021, as a way of offsetting the accelerating cost of homebuying, and those funds allowed housing initiatives to quickly expand far beyond typical funding levels. For instance, the Commonwealth Builder Program, which helps fund the development of new housing that can be purchased at subsidized rates, had $115 million in federal relief dollars piled onto its initial $60 million in state funding. That’s helped to fund projects like the St. Therese in Everett, which has more than 80 units for senior citizens.

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“There’s a whole generation of potential homeowners who are being squeezed out by lack of housing supply, high prices, and now higher mortgage rates,” said Clark Ziegler, executive director of the Massachusetts Housing Partnership, the other quasi-state agency that administers MassDREAMS. “The help we’re giving out right now essentially functions as relief from the immense pressure in the market.”

Demand for that assistance has been immense, too.

In November and December alone, MassHousing reviewed or administered more than 1,200 down-payment assistance grants — ranging from $17,000 to $50,000 — across 32 communities, most of them in so-called Gateway Cities that were hit hard by the pandemic. That accounts for $40 million of the $65 million allocated to the program in just its first two months.

The two-month total is about equal to the number of households the agency helped with down-payment assistance in the entire 2020 fiscal year, the majority of which received loans, not no-strings-attached grants that buyers do not have to pay back.

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“We have to hope,” said Kornegay, “that we get more money for this. Because there is a demonstrated need. We could very easily go through another $65 million.”

For its part, Boston has directed the majority of its $60 million for homeownership programs to construction of homes on vacant, city-owned lots that will be set aside for purchase by low- and moderate-income buyers. Last November, the city said it would make 70 of the 150 city-owned parcels the Boston Planning and Development Agency identified as suitable for development available to developers. The city is also providing down-payment assistance, writing down interest rates, and supporting state mortgage programs.

Jasmine Toussaint, a longtime resident of Greater Boston who was able to purchase a home in Haverhill with the help of a state program aimed at lowering barriers to homeownership.Jonathan Wiggs/Globe Staff

Symone Crawford, executive director of the Massachusetts Affordable Housing Alliance, said those efforts represent a shift from how the government typically thinks about housing assistance. In most cases, housing aid funds go to rental assistance programs, which, while designed to help residents retain their housing, can still leave people vulnerable to eviction or displacement.

Adding homeownership programs to the city and state’s funding priorities helps anchor people in their neighborhood, said Crawford, even if the amount needed per person is higher.

“For at least over a decade, the state has been heavily focused on rental production and preservation,” said Crawford. “And it’s not that we can solve our homeownership crisis with these programs, but if we can offer the security and stability of owning a home to more of our residents, particularly to our vulnerable populations, that’s worth investing in.”

But the path forward may prove tricky.

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At the city level, Sheila Dillon, Boston’s chief of housing, said she’s optimistic demand for the new programs will convince city leaders to continuing investing in homebuying programs.

“This infusion is going to help us reach a significant number of families,” said Dillon, “and we’re thinking about homeownership now as one of our top priorities.”

Ziegler, the MHP director, is hoping the state will make the MassDREAMS program permanent, citing the remaining $1.75 billion in ARPA money as a potential source of funding.

Beyond that, advocates hope those programs dovetail with the priorities of Governor Maura Healey, who has put housing affordability at the top of her agenda.

Karissa Hand, a spokesperson for Healey, said in a statement that the governor will prioritize both housing production and homebuying assistance, and that she will “explore all resources available to achieve these goals, including the use of ARPA funds, state capital and operating funds, as well as other sources.”

People like Toussaint say that any money toward homeownership is well worth it.

“Every part of buying a house is just so expensive here — your monthly payment, your down payment. And then you add in things like furniture,” she said. “It makes me wonder how anyone does this without help.”


Andrew Brinker can be reached at andrew.brinker@globe.com. Follow him @andrewnbrinker.