Part of the lure of the American Dream of homeownership is the freedom to personalize your house, making it your “home,” and the potential to build wealth over time. However, without proper planning and consumer education, the American Dream can quickly become the American Nightmare. Rising utility costs and property taxes, as well as unexpected maintenance needs can render the once affordable home a housing burden. The recent housing crisis illustrated to us how severe this burden can be. And with the tightening of the credit markets and more people moving into the rental market, the American Dream seems to be slipping away for those of lower wealth. Given that one-third of the American population rent their home and are now finding rising rents due to this increase in rental demand, new and creative approaches to housing policies – including leasing opportunities – need to be pursued.
The White House along with the Departments of Housing and Urban Development, Treasury and Agriculture are pooling resources to explore this problem. One of the key platforms of future policies being considered is “rental housing + children”. The 2011 Spring issue of HUD’s “Evidence Matters: Informing the Next Generation of Rental Housing Policy” takes a look at policy reassessment and states that parental net worth is a key predictor of a child’s long-term educational attainment. “Even when other factors are taken into account – parental involvement in children’s education, for example – net worth remains critical.” Could it be that any new housing policy must think more broadly than just the provision of housing alone? Is there a way to begin to address these critical issues of housing, net worth and education in the same policy? As the major policy makers consider these critical questions, they identified the Cornerstone Corporation for Share Equity as an innovator in this area.
Cornerstone Corporation for Shared Equity, a non-profit organization that finances, develops and manages affordable apartment housing, recognized this problem as early as 2000. In response, they developed the Renter Equity program to provide renters with safe, decent and affordable housing as well as the opportunity to accumulate wealth. Rewards for positive behaviors such as paying rent on time, attending monthly resident meetings and contributing to the upkeep of designated common areas are provided in the form of credits. These credits have a cash value and over time are transferred to cash payments. After five years, the cash payments can be withdrawn for expenses such as educational expenses, car repairs, home maintenance and housing down payments.
The Renter Equity program’s success lies in the fact that it instills a sense of ownership and personal investment in the tenants, reduces maintenance and property costs, equips the renters with the knowledge and skills to maintain and upkeep a property, and provides a means to accumulate cash savings. In addition to investing in the place (physical environment), the program invests in the people through capacity building. The result is residents who are more stable and engaged in their community and housing that maintains its quality and value.
What is promising about this approach is that it equips and empowers the residents to make a positive impact on their community while they reap the benefits of their efforts. Additionally, it provides them with skills and knowledge that are transferable to any place they may live. These positive outcomes foster a sense of ownership and investment in the neighborhood – outcomes which benefit the resident and the larger community.
Guest Contributor: Rosalyn Keesee