Program Promotes Homeownership for Low-Income Renters

File photo by Jeramey Jannene.

A program meant to promote homeownership and empower low-income residents in Milwaukee has opened the door for 30 tenants in affordable housing to become homeowners.

The Metcalfe Park Homeownership Initiative is a lease-purchase program in the Metcalfe Park neighborhood on the north side of Milwaukee. Thirty single-family homes were built 15 years ago on tax-foreclosed lots. Now the homes, which are valued at about $125,000 each, are being sold to tenants for anywhere between $40,000 and $80,000.

They’re available at those rates because of a provision in the federal low-income housing tax credit that allows tenants to buy their homes at a discount 15 years after development. It’s known as the eventual tenant ownership model. Developers who receive the tax credit agree to those terms.

Three of the 30 homes at Metcalfe Park were sold last year. Now advocates are promoting the benefits of homeownership to other eligible tenants.

The developers partnered with the city of Milwaukee and Acts Housing, a non-profit homeowner advocacy group, to educate residents about the opportunity. Dee Kemp, vice president of programs for Acts Housing, said she is already seeing the positive impact of the program.

Kemp told the story of a single mother raising three boys who has lived in one of the Metcalfe Park homes for more than a decade. She was paying $1,100 per month in rent. Since buying the home last year, her monthly mortgage payment with principal interest, taxes and insurance is $689.60 per month until she pays off the house in 15 years. Kemp said this is an example of how homeownership empowers residents.

“That’s over $400 in savings every month that she could put towards her kids’ education, taking her kids on vacation, whatever she wants to,” Kemp said. “Her quality of life has improved because she’s in a much more financially stable situation by being a homeowner.”

Painting walls, buying a pet or erecting a fence all require permission from a landlord as a renter. But Kemp reminded the eligible tenants that as an owner, they can make choices for themselves.

“Maybe you don’t even feel those restrictions until they’ve been taken off of you and you’re like, ‘Oh my God, this is amazing. I can do my own thing. I can make this my own,'” Kemp said.

Ted Matkom, Wisconsin market president for one of the developers, Gorman & Company, said when the tenants learned about the chance to own their homes, they were in disbelief.

“Rental is fine in the sense that it provides people affordable housing, but it doesn’t provide people a sense of place. It is transitory in its very nature,” Matkom said.

Benefits of homeownership may ripple to larger community

Matkom said homeownership is the key to the stability of a neighborhood.

“If you have your home as an asset and you have pride in the home that you are living in, (that) allows you to become a true stakeholder in the neighborhood,” Matkom said.

Almost all the tenants in the Metcalfe Park project are Black. Kemp said increasing homeownership rates is a key step to create equity in a “hyper-segregated” city that aims to increase its population to 1 million residents.

While homeownership in the city decreased across the board between 2010 and 2021, homeownership among non-Hispanic whites remains high, according to a 2022 housing affordability analysis of the city. Approximately 27 percent of Black residents owned their homes in 2021, compared to approximately 55 percent of white residents.

“The people who live here don’t own this city. And that’s what I’m working to change,” Kemp said.

Kemp has lived on the north side of the city her whole life and believes that by increasing homeownership rates, the area will prosper. She said when neighborhoods are made up of homeowners, they tend to thrive because people have a vested interest in where they live.

“What somebody is calling the ‘ghetto’ or the ‘hood’ right now, they’re going to be calling ‘five minutes from downtown’ in five years,” Kemp said.

Acts Housing lending arm is prepared to provide loans for aspiring homeowners in the Metcalfe Park Homeownership Initiative who might not be eligible at traditional banks.

Developers are looking to use a similar model in future projects

Twenty-seven of the 30 homes are up for sale this year. The homes are offered to the current tenants and cannot be brought on to the open market. If tenants don’t want to buy the homes now, they can keep renting, and the law protects them from being displaced.

“Everyone’s got that equity when they purchase the home. In terms of building that intergenerational and family wealth, they can begin there, which is a great start,” Matkom said.

Gorman and Company said it plans to sell 250 homes over the next 10 years under the eventual tenant ownership model.

“You don’t have to wish for (homeownership). You can actually make it happen for yourself,” Kemp said.

Listen to the WPR report here.

Program promotes homeownership for low-income Milwaukee renters was originally published by Wisconsin Public Radio.