Skyrocketing housing costs and out-of-state competition are pushing many Arizonans out of the housing market.
First-time homebuyers or middle to low-income homebuyers can barely compete with cash offers that go way above the asking price. Even those in the health industry are having difficulties in finding homes. Dre Thompson became uniquely aware of this problem when she read a story about a nurse in Phoenix who couldn’t buy a house.
“Serving frontline throughout the pandemic and wasn’t able to buy a home in the city of Phoenix and I just felt that there’s something problematic there,” Thompson said.
Thompson is the first CEO of Tucson’s Industrial Development Authority (IDA), a nonprofit economic development organization that brings together different stakeholders to create projects for Tucson’s community like affordable housing, climate, and infrastructure projects.
Thompson said essential workers needed to be supported in the frenzied market. Thompson worried that essential workers may end up leaving Tucson to find housing elsewhere and this would be incredibly detrimental to the Tucson community.
In partnership with the City of Tucson, Tucson Realtors Charitable Foundation, FHR Cares, CIC, Pima IDA, and Pima Tucson Homebuyers Solution, Tucson IDA will begin offering down payment assistance to essential workers in June through the Essential Workers Housing Fund. Tucson IDA will use the Centers for Disease Control’s definition of an essential worker to assess qualified applicants.
“There’s a lot so this does to help people be more competitive because they can come in with a stronger downpayment and the good thing about this program is that it doesn’t slow down the home buying process, there are down payment programs out there that aren’t going to look as desirable to go to the seller because there’s a delay, but this doesn’t delay the timeline at all,” Thompson said.
The housing fund will provide 1% of the first mortgage loan, up to $2,500, to assist with closing costs. What’s more, applicants can layer this on top of the Pima Tucson Homebuyer’s Solution Program (PTHS) if their income is under $122,100. The PTHS Program covers 2% to 5% of the first mortgage loan in downpayment assistance. The assistance in both programs can be considered a grant if the buyer stays in the home for three years and makes the home their permanent residence.
“But what homeownership brings to families, it brings financial stability, so they can go from renting, moving from place to place and school to school, to homeownership to wealth creation,” Tucson Mayor Regina Romero said at the Essential Workers Housing Fund press conference on Wednesday, May 25.
These programs came at just the right time because housing is getting much less affordable. According to RealtyHop’s May 2022 Housing Affordability Index, 90 cities out of 100 experienced housing price increases every month. Tucson ranks #45 out of 100 and it is reported that 35% of household income goes to homeownership costs. This is a 1.69% increase from April’s Index report.
Homeownership is one of the easier ways for Tucson residents to begin wealth creation and the current housing market exacerbates wealth inequality. If only high-income people can buy homes, then Tucson loses the opportunity to build wealth throughout all aspects of the community.
“Ninety percent of them (PTHS participants) are first-time homebuyers, but you don’t need to be a first-time homebuyer to participate,” Thompson said. “Fifty-five percent of the participants in this program identify as Hispanic or Latino and so we really see homeownership as a part of building generational wealth.”
By layering the benefits of PTHS and the Essential Workers Housing Fund for homebuyers, Thompson believes this will address some of the inequality in the housing market at the moment.
“It’s very meaningful, just because of the way that essential workers for so supportive in our community during the pandemic and this is just some ability to say thank you to them for the work that they did,” Thompson said.