Expanding Affordable Homeownership with Private Capital: A Study of the Nehemiah Down Payment Assistance Program
Apr 01, 2004
Perry Wong, Daniela Murphy, Frank Fogelbach and Rob Koepp

It is a long-held belief that owning a home is a symbol of and a testament to the American Dream. In this first study of its kind, researchers at the Milken Institute found that Down Payment Assistance Programs (DAP) have become vital economic tools for helping low- to moderate-income families reach that dream and become homeowners.

Conducted by the Milken Institute and sponsored by the Nehemiah Corporation of America, a DAP provider, the study examined over 36,000 down payment assistance recipient families in six geographically diverse cities to quantify the impact of DAP on individuals, cities and communities.

Among the key findings:

  • Over the last 12 years, homes prices have risen 30 percent faster than wages and salaries for low- to-moderate income families, creating a growing homeownership affordability gap. This gap is making it increasingly difficult for lower-income families to purchase a home without down payment assistance.
  • DAPs are proven to bridge the homeownership affordability gap and have put hundreds of thousands of hard-working families in homes.
  • The Nehemiah Program has added $287 million over the last six years to municipal and county property tax receipts in the six markets studied, proving that homeownership is a vital vehicle for building the tax base in cities and counties.
  • Nationally, over 115,000 primarily low- to moderate-income families (approximately 70 percent of Nehemiah's total DAP portfolio) saw their home equity rise by an aggregate total of over $2.2 billion between 1997 and 2003 - an average of more than $18,000 per family over the past six years.
  • Minority homeowners in the six markets examined have seen significant rises in equity; on average African-American families have seen equity rise $7,200, while Hispanic families have seen their equity rise approximately $12,000 on average.
  • Anecdotally, DAP homeowners report much greater economic flexibility and stability that leads to more productive and happier lives, and rebuilt communities.

While some of the social and economic benei??ts of owner-occupant housing have been documented, a more specii??c measure of the benei??ts of effective market-driven approaches has not been emphasized. This study is one of the few large-scale studies of its kind, and one of the i??rst efforts to investigate wealth accumulation by Nehemiah's DAP recipients as well as DAP's impact on government i??nance.