The American Dream Come True
Written by Tim Buckley, November 2023
Increasingly, the American Dream may appear to some more like a pipedream. The middle class has been severely eroded. Based on a study released last year,* almost three quarters of those who remain in the middle class said their wages can’t keep up with cost-of-living increases. So, they drain their savings and add credit card debt just to stay afloat.
Home ownership, and the equity derived from its accrued value, was the foundation upon which America’s middle class was built. But since the 1980s, the percentage of American families owning their home has shrunk, especially among people of color. With median home prices above $450,000 in the Salem area, the idea of home ownership has nearly vanished for moderate income families. American geographer Ruth Wilson Gilmore calls this decades-old trend the “organized abandonment” of our social obligation to shelter humans. Instead of housing being a commercial commodity, Gilmore says that it, like other basics, must be considered a human right.
In the Mid-Willamette Valley, a collaborative group convened by CBEL (Community Business and Education Leaders) has taken a big step in that direction. The group embraces a bold national model called Building Community Resilience and is applying it to the poorest neighborhoods in the Salem/Keizer area. CBEL initiated a pilot project aimed at reducing housing insecurity in a number of ways. First is to acknowledge that housing involves a continuum. On one end is the need for more secure temporary housing where 24/7 navigation services give people who are homeless better resources to break that cycle. Likewise, there’s a need for more emergency funding to help renters and homeowners through a crisis and avoid eviction or foreclosure.
At the other end of the continuum is home ownership, and the Salem area is like a desert when it comes to homes that are affordable to low and moderate income families.
CBEL has begun a conversation with local leaders about how to help more families become home owners if that is part of their dream.
One pilot project developed by Marion County will provide downpayment assistance to families who qualify. Applicants must have an annual income that is less than 80 percent of the area median; in Marion County, that figure is about $66,950 for a family of four. CBEL executive director Jim Seymour said that this model could be repeated elsewhere and might be a step toward rebuilding a sustainable middle class.
Because the motivation for profit has been purposefully removed from the equation, the homes will sell for far below market rate. To make the numbers work, federal and state grants are involved, as well as private local investments. At least one credit union has moderated its policies to allow more flex in lending standards. Another partner is conducting financial health classes for applicants, to help them get pre-qualified.
While this may seem to some to be a handout rather than a hand up, “It needn’t be if it’s designed and implemented right” said Seymour. He went on to say, “Home ownership builds a sense of belonging and community. A sense of belonging and community strengthens families and strong families support their children’s education. In the long run it’s less expensive and more effective to help families achieve their dreams than to catch them in the safety net.”
*A 2022 report by Change Research. 1,263 adults nationwide were interviewed, with incomes between $30,000 and $100,000. Margin of error is 3.0%
The road to home ownership is well traveled. The process is structured according to long established rules and is greatly affected by “market” fluctuations, which create opportunities for some and barriers for others. Here are the key participants in “normal” transactions:
Property owner/seller
Real estate broker(s)
Buyer
Lender/financial institution
Mortgage broker
The Marion County Home Ownership pilot project, while not the first affordable housing effort in the county, creates a unique opportunity for more affordable single-family homes. The number of partners involved here is significantly more than the above list. Their participation and collaboration make it possible for those unable to qualify before to qualify now. The collaborating partners include:
CBEL
Dept. of Housing and Urban Development (HUD), a federal agency
Marion County – source of grant funding for affordable housing
Commissioner Colm Willis, lead applicant for HUD funding
Housing Authority – resource staff for qualifying buyers and resource for those seeking affordable housing, outside city limits
Grants management staff for CDBG and HOME funding from HUD
Private Donor
DevNW – a nonprofit providing education, financial counseling and project management services for HUD funding in the county
Residential Lenders – in this case Central Willamette Credit Union
Other organizations equally important in determining the need, and then helping to set priorities, are the Mid-Willamette Valley Homeless Alliance and the Mid-Willamette Valley Community Action Agency.
What follows is a brief summary of how each of the partners contributed to this project.
CBEL, funded by Mountain West Investments, has been a prime stimulus for this project. CBEL takes its cues from the three neighborhood family councils it supports, and housing has been a consistent frontrunner in surveys of neighbors in the past few years. CBEL’s mission is to build community resilience by amplifying the voices of those neighborhoods, following a national model developed by Dr. Wendy Ellis, whose program – Building Community Resilience – is being duplicated elsewhere in the US.
The Department of Housing and Urban Development has historically allotted considerable funding to states for meeting housing needs. With housing insecurity at an all-time high in the country, Congress has made considerable increases in this funding to try to meet rising demand.
Marion County.
The board of Commissioners, particularly with the leadership of Chairman Colm Willis, has recently received about $2 million for various affordable housing purposes and projects in the county.
2021 was the first year Marion County’s population has exceeded the threshold to be considered its own “entitlement area”, as opposed to being part of a larger statewide group, having to share a piece of the state grant.
More than $500,000 of that $2 million will be dedicated to zero interest, payment-deferred loans for home rehabilitation, helping people stay in homes they already own. And, with additional allocations in the first three years for helping buyers with downpayment assistance, there is now about $1 million earmarked for that purpose, according to Steve Dickey, the County’s Program Manager for CDBG and HOME grants. With downpayment assistance, the borrower’s interest rate on the loan can be reduced significantly, thus making the monthly mortgage payments more affordable. Up to $25,000 of that assistance, in the form of a zero interest, payment-deferred loan, will be forgiven if the home owner remains in the home for 10 years. Up to $100,000 of additional assistance, in the form of a zero interest, payment-deferred loan, is payable only when the owner sells the home.
DevNW has been a player in the affordable housing, business development, and neighborhood revitalization arena for years. Essentially, the nonprofit receives funding through various revenue streams, including grants from counties, to ensure that communities, their neighborhoods and the families living there have the education, opportunity, and the support needed to thrive financially. Their staff of 60, shared among three Willamette Valley cities focus on everything from financial wellbeing and helping people start businesses to affordable rentals, downpayment assistance, rehabbing homes and neighborhood revitalization. “For this project, DevNW will be help by providing financial education and counseling”, said Luis Mendoza, the company’s Asset Building Manager. “Specifically, we can help individuals develop better credit and build savings. We’ll even match a certain amount that people save, helping them increase their net worth.”
Mendoza’s parents used that very program to purchase their first home in Oregon. “I was a teenager and remember that my folks took some classes like we still offer, and then qualified them to get help with their downpayment and closing costs.”
“…we can help individuals develop better credit and build savings. We’ll even match a certain amount that people save, helping them increase their net worth.”
Central Willamette Credit Union began in 1955 and has expanded to serve customers in Linn, Benton, Marion and Polk counties. “We’re a good fit for this project because we share the same vision as CBEL helping community members to become homeowners,” said Evelle Cleary, Real Estate Lending Manager for Central Willamette Credit Union.
Even beyond this particular project, CWCU has a track record of prioritizing the well-being of their neighbors over maximizing profit, allowing their community to prosper financially. They have long partnered with DevNW, for example, as a path to provide financial education. “We partner with DevNW to meet people where they are, financially, on the road to homeownership. We offer products, tools, and education to build credit and wealth to help move them toward their goal of becoming homeowners,” Cleary said.
The credit union is traveling an extra mile on this project; CWCU is keeping this portfolio of homes “in house.” “This allows us to verify credit through non-traditional sources which allows for reduced credit score eligibility. We are always looking for innovative ways to help our members and communities,” said Cleary.
The CBEL Touch
“There’s a huge need for this kind of housing,” said Mendoza, as he listed projects in other counties where the number of applicants far exceeds the number of units for sale. “I expect that this project will likewise attract a lot of attention, and I hope that proving the viability of this model will stimulate more projects like it.”
“The old model of affordable housing wasn’t as collaborative as this one,” added Marion County’s grant manager Steve Dickey. In the old model, each of the players in the deal are busy doing their own thing. There’s a downside to that - without being at the same table, sharing the vision, we lose opportunities to save the new homeowner a lot of money.”
“This kind of model gets us past some of the traditional roadblocks we find in affordable housing,” Dickey continued. “With all of us in collaboration, we each have a better awareness of what resources are available. With fewer roadblocks, the cost to the homeowner gets reduced.”
“This would not have happened at all were it not for CBEL bringing the many partners together on a regular basis to find solutions for the benefit of our communities,” said Central Willamette’s Evelle Cleary. “I so appreciate Mountain West Investment for its commitment, and to Jim Seymour for getting us together and supporting our ability to figure this out,” she said.
What’s Next?
In surveys of three of Salem/Keizer’s poorer neighborhoods in the past year, with more than 500 people responding, the subject of affordable housing is always either at the top or a close second to other crucial needs. The Building Community Resilience model that CBEL is following insists that for lasting social change, we must amplify the voices of our neediest neighborhoods and follow their lead, rather than continuing to define their need without their presence at the table.
Salem and Keizer’s housing problem will not be solved with one project. In that sense, CBEL sees the issue of housing as a continuum, with the following necessary components:
a “rapid response” fund that is flexible, so families with short term emergencies can recover without eviction or foreclosure. The Strong Families Fund is a model, and it hasn’t the volume of donations needed to meet current demand
low-barrier family shelters for homeless, currently available but not in sufficient numbers
a multi-disciplinary care team, also available but needing more consistent funding
temporary shelters with navigation services and a network of partners, such as what Church @ the Park offers. They have a waiting list with more than 400 people
supported transitional housing, which is scarce in Marion and Polk counties
affordable permanent housing, i.e rental properties
home ownership that is affordable to low- and medium-income families