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Evaluating Rent-to-Own Programs: Path to Homeownership for Low-Income Renters and Tools for Inner-City Community Development Author: Felix F. AuYeung Dissertation School: University of Pittsburgh Pages: 31 Publication Date: 04/2007 Availability: Access Number: 5021 Abstract: Widening disparity continues to be a dividing issue in contemporary America. As national income and wealth disparity grow over the years, and as government policies, both past and present, encourage the geographical segregation of socioeconomic classes, many Americans find uncomfortable pockets of deep poverty within their inner cities. At the individual level, this growing national disparity boils down to the neighborhood scale, where concentrated poverty has fermented grounds for high unemployment, high crime rates, high substance abuse, and low educational attainment. Concurrently, housing prices have skyrocketed relative to incomes and inflation, and affordable housing options for low-income families, particularly those in inner-city neighborhoods, remain a quagmire. The poverty rate has surged and housing assistance has failed to keep pace with the persistent growth in low-income renters with severe housing cost burdens. Rent-to-Own, or Lease-Purchase, housing programs offer a promising possibility that leverages public and private funds and encourages nonprofit and market cooperation, to develop homeownership and wealth accumulation opportunities for low-income residents while providing tools and local control for the revitalization process in distressed communities. Their success in existing programs gives hope that there may be a replicable solution available that develops affordable housing for those who need it most, that gives low-income families a chance to gain ground, and that provides community development corporations (CDC) a tool for neighborhood revitalization. This study evaluates four rent-to-own programs across the country and extracts HUD-relevant policy implications based on both their successes and shortcomings. The research reveals a list of model best practices and includes a simple financial summary for three of the programs to show generically how they are structured and what the buyer owes at the time of transition. The research also discovers the importance of owner readiness for the success of the programs. This paper covers the rationale, design, analysis, and findings of the study. |
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