New Report Urges MD to Help Millennials and Minorities Hurdle Barriers to Homeownership

Annapolis, MD – Expanding down payment assistance is one way that Maryland can help members of the millennial generation move out of their parents’ basements and into homeownership and it can help minority families move from the rental market into the housing market.

Both demographics are important to the state’s recovering economy, according to a new report.

The study by Neighborhood Stabilization and Homeownership Workgroup looked at the challenges facing Maryland’s recovering housing market. Click here to see the workgroup’s final report to House Speaker Michael Busch, delivered Jan. 20.

Meeting with focus groups made up of realtors, lenders, community leaders and housing counselors, researchers found that the housing market in much of Maryland is well on the way to a strong recovery. For example, home sales prices have returned to where they were before the housing bubble burst.

But parts of the state remain mired in the after-effects of the Great Recession, particularly in low to moderate income communities with older homes. Homeownership in Maryland has dropped from a peak of nearly 70 percent in 2007 to 66.5 percent in 2013.

Millennials and minorities, in particular, are finding it hard to break into the housing market in the “new normal” of tighter lending criteria and higher down payment requirements in a post-recession environment of flat wages.

Focus group members told researchers that young adults, 25 to 34, may be hesitant about choosing homeownership in part because they typically are saddled with more student loan debt than prior generations. Immigrant and minority families typically cannot draw upon the accumulated wealth needed to afford down payment that could be as high as 20 percent on a mortgage loan.

“Even a down payment of five percent could take 10 to 20 years for households to accumulate,” the workgroup noted. “Having access to down payment assistance … may be increasingly critical to attaining homeownership, particularly among younger and more diverse households.”

The group found that the competitive rates and significant down payment assistance offered through the Maryland Mortgage Program is an important tool for the state.

The workgroup said a vigorous housing market is a key ingredient to the state’s economic vitality.

“In addition to fulfilling a basic need for shelter, homeownership supports family stability, encourages wealth build-up, and provides many other social and financial benefits,” concluded the workgroup. Homeownership also is “a critical tool in revitalizing or stabilizing rural, suburban and urban neighborhoods in distress or threatened with decline.”