Jasmine Jacobs held tightly to her 6-year-old daughter’s hand as they walked up to their new home together. Awaiting their arrival were some of the people who helped her become a first-time homeowner, including 11 seniors from the construction management academy at The Villages High School. The young builders stood proudly outside the brand-new home on Winners Circle in Lady Lake as it glistened in the sunlight Friday morning. For the first time, Habitat for Humanity of Lake-Sumter partnered with The Villages Charter School to build the house. Construction started in August, with the students working several days a week until it was completed.
“They were able to hone their construction skills and get a realistic feel for the business,” said Bruce Haberle, instructor of the construction management academy. “It’s a team-building experience where they were able to give back to those who are less fortunate.”
Habitat for Humanity, a housing organization that works with communities across the nation, chooses its recipients through a first-come, first-qualified process.
Jacobs, a retail store manager, learned she had been selected after going through several steps for approval.
“I was overwhelmed,” she said. “I was like, ‘Is this really happening?’ But now that we’re at the tail end of it, I’m just so excited.”
The families chosen by Habitat for Humanity are required to contribute 200 hours of sweat equity, which means they take part in the building process.
Jacobs helped by greeting and thanking volunteers and donors, and she also took financial-education courses, credit counseling and first-time homebuyer courses.
“I got to help do the outside, and I did some caulking, painting and flooring,” she said. “I had no idea what I was doing, but the kids from school were very nice and helped me out.”
She said she enjoyed working with the students because they brought some lively energy to the site.
“They were loud and funny, making jokes and blasting music,” she said. “They made it fun.”
This is the first home students have built through the academy, which launched last school year.
“It’s been amazing, and they’ve done a great job,” said Danielle Stroud, director of development for Habitat for Humanity of Lake-Sumter. “We really hope they learned something along the way, which is the purpose of this partnership.”
If you are familiar with Habitat for Humanity you’re likely familiar with the term “Sweat Equity.” A simple phrase with a big meaning. Sweat equity is often used to describe the value someone adds to a project through the hard work they contribute to making it a success. For example, Habitat home owners contribute sweat equity by volunteering on a worksite, in the office, or through educational courses.
For Anita Brooks, the term “sweat equity” may have been new but the concept was far from foreign to her. Ms. Brooks, as her students call her, is a third-grade teacher who earned her teaching degree while working for the school district. “I worked as a receptionist for 12 years,” said Anita. “And I put myself through school so I could become a teacher.”
It was a colleague of Anita’s at the school that first turned her on to the idea of partnering with Habitat for Humanity to build a home. Anita and her family had always been renters but had a unique opportunity to build on land deeded to her by her mother. The two-and-half acre parcel was just minutes from their current home, in rural Oxford and the location played a part in the home Anita and her family chose to build.
“They gave us a few options in terms of models we could pick from,” said Anita. “Being in the country, I knew I wanted a porch.” Her daughter, 15-year-old Lailah suggested they go a four-bedroom model so Anita could use one of the rooms as an office. Anita agreed noting that she often brings work home with her no matter how much time she spends at school.
As her house begins to take shape, Anita says she stops by every day after school to see what has been accomplished and hopes that someone is still there working so she can express her gratitude. “I just want to thank everyone who has had a hand in building my home,” said Anita. Those working on her home often seem surprised by her gesture, but Anita feels it’s only right to express gratitude to those helping her accomplish something she couldn’t do on her own.
As a family that rented but never owned a home of their own, Anita says that her daughter is excited to finally have a room that she can do something with. “She likes to watch where her room is going to be. She’s enjoying the thought of picking out colors and making it her own,” said Anita.
The family plans to close on their home this summer and Anita says they’ll likely have a house warming party just to have family over. “I don’t need anything else, no more toasters or anything,” she said laughingly. “But we’re very family-orientated and this will be a great place to celebrate each other and the things we accomplish.”
Anita also wants her daughter and her older son Brandell, who’s 21 and no longer lives at home, to know that they finally have a home to come back to.
As for sweat equity in her new home, Anita says she’s ready to invest in the house she plans to make a home for her and her children. “I’ve been saving up my vacation days,” she says with enthusiasm. “I’m looking forward to helping out and getting my hands dirty!”
By David Larrick
In our last article we compared various hourly wages and what they could afford for rental housing based on the 2018 Fair Market Rent (FMR) per month. We learned that it took $18/hour, or $37,440 per year, for a person to afford the 2018 FMR of $840 for a one bedroom home.
But what if you wanted to buy a home? On the traditional market, many of these same wages may face extreme difficulties in obtaining their own home and staying within the envelope of affordability. That’s where affordable housing builders step in – organizations like Habitat for Humanity of Lake-Sumter or Homes In Partnership exist to partner with families who are edged out of the traditional market. These organizations offer opportunities to partner, allowing the financial entry point to homeownership to become more obtainable.
Let’s take a moment to look at a real life scenario – let’s meet Janice and Rose. We’ve used her budget and income to compare her rental reality in a 2BR Fair Market rental prior to her obtaining a 2BR home built in partnership with Habitat for Humanity of Lake-Sumter. Like all of the families who qualify for the Habitat program and are approved for their loan, Janice was able to get into a home with zero down payment, no closing costs, and a monthly mortgage that includes taxes and insurance that they can afford. Now she and her daughter have a safe and secure place to call home.
$12/hour: Annual Gross Income $24,960: Monthly Gross Income $2,080
Janice moved from paying 48% of her gross income for her two bedroom rental (with a negative cash flow of $376) to owning her own home, paying just 23% for housing, with a positive cash flow each month. While these numbers are still based on gross take home, we can see the meaningful shift toward a more realistic budget.
What’s the impact on her health? Her outlook for a future? Her ability to withstand an unexpected expense?
Affordable housing is affordable not because it’s of lower quality or built to sub-standard codes. It’s affordable because of the generosity of donors and volunteers who invest in the future of these families. Habitat for Humanity of Lake-Sumter works to build an affordable product, but also works to raise capital through relationships in the community in order to subsidize the homes for these families so they can be sold at a price that is affordable.
Habitat for Humanity of Lake-Sumter firmly believes in providing a pathway out of poverty. According to The U.S. Department of Housing and Urban Development studies have shown that “homeowners accumulate wealth as the investment in their homes grow, enjoy better living conditions, are often more involved in their communities, and have children who tend on average to do better in school and are less likely to become involved with crime.” Because of the stability and financial flexibility that an affordable home offers, higher graduation rates for children of homeowners is 19 percent higher than for renters, and they are twice as likely to acquire some post-secondary education, according to a study in a journal published by the Federal Reserve Bank of New York.
As with many of our families we are looking forward to seeing Janice and her daughter Rose prosper – you never know who Rose will grow up to be, but we are happy to have had a part in providing her the opportunity to thrive.
By Lee Owen
C is for Clarifying the Calculation, Part II: Reality Check
In our last article we looked at the AMI, Area Median Income, and learned that the AMI for Lake County is $62,900 ($30.24/hour based on 40 hours/week, 52 paid weeks/year). Pop quiz: what does ‘median’ mean? It’s not the average; it means that half make more, half make less.
Median income drives the entire conversation on affordable housing. Pop quiz: What does the term ‘affordable housing’ mean? It means that no more than 30% of gross household income is spent on rent/utilities or, in the case of home ownership, PITI (principle, interest, taxes, and insurance). Why? Because everyone needs room in their budget to pay for other expenses.
Using the chart below, we see that someone earning the median income for Lake County would be able to afford the Fair Market Rent (FMR) for housing. What about those earning less than the median? Let’s walk through those numbers. The chart is based on the following details:
- Florida’s 2019 minimum wage is $8.46
- The Fair Market Rent (FMR) is from the National Low Income Housing Coalition’s (NLIHC) annual Out of Reach data for housing costs in zip code 32757 (at the site, click on the zip code for detailed information)
- The 1 BR and 2 BR columns show the difference between the affordable, 30% housing number (what you’d ideally pay) and the actual Fair Market Rent
- Income is pre-tax, based on 52 paid weeks/year at 40 hours/week, no overtime
How does paying more than 30% affect the rest of someone’s finances? Let’s look at three theoretical budgets for a single person renting a one bedroom home. We’re using percentage allocations commonly recommended by professional planners. Are you ready to see what those earning less than the median income are dealing with?
Any conversation about affordable housing must begin with AMI, Area Median Income. In this article we’ll explore this term in more detail to make sure we’re all on the same page. In Part II, we’ll look at a sample budget to illustrate the impact of housing expense on various income levels. Ready to dive in?
By ‘Area,’ we mean the MSA, or Metropolitan Statistical Area. The MSA is quite useful. It captures all manner of data for a given geography so anyone—employer, government agency, job candidate, hospital, etc.—can compare apples and apples. (Or, since this is Florida, oranges to oranges.) For example, economic development groups, transportation analyses, labor market studies, and of course, the housing industry will all be working from the same information to write policy, design long-term plans, public works projects, and so on.
Here’s a great definition of the MSA from Investopedia.com: “Metropolitan statistical areas usually consist of a core city with a large population and its surrounding region, which may include several adjacent counties. The area defined by the MSA is typically marked by significant social and economic interaction. People living in outlying rural areas, for example, may commute considerable distances to work, shop, or attend social activities in the urban center.
There are almost 400 metropolitan statistical areas in the United States. In contrast to micropolitan statistical areas, which center on towns and smaller communities with populations below 10,000, metropolitan statistical areas must include a city with a population of at least 50,000.”
Our local Habitat for Humanity affiliate is covered by two MSA’s: Lake County is part of the Orlando-Kissimmee-Sanford MSA, while Sumter County is in The Villages’ MSA. The MSA data drives the income calculations for any affordable housing program.
‘Median’ isn’t the same thing as ‘average.’ Here’s how the Census Bureau defines it: “Median income is the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount.” So, for your area (MSA) of interest, imagine lining up every household, from poorest to richest. The household in the exact middle would represent the median for that MSA—half make less, half make more.
In the very simple example below, the total household income for the area is $394,850. With just 7 homes, that means the average income is $56,407. However, the median, or the point at which half make more, half make less, is $62,900.
|One home at each income||Total Income|
And how is an area’s income figured out to begin with? It starts with the Census Bureau; each year they contact “over 3.5 million households
across the country to participate in the American Community Survey. When you respond to the survey, you are doing your part to ensure decisions about your community can be made using the best data available.” (Learn more about the ACS here). The ACS includes income data.
Once that data is available, HUD gets to work. They use the data to calculate the median income for each geographic area based on how strong the data is. If it’s deemed statistically reliable, they can run with that for the year; if it’s not statistically reliable, for whatever reason, they’ll work on a combination of surveys and formulas…and it gets complicated. To see the process in detail for Lake County, Florida, check out their calculation process here.
From this process, HUD announces the AMI for a given area. That number will then be used for different types of affordable housing programs (rentals and purchases) across the country. Our Habitat affiliate generally uses the USDA’s mortgage program for eligible home owners, so we use their AMI charts. The chart below is what Habitat would look at. (This data is extrapolated from the USDA’s site for 2018.) Remember, the median means half the residents earn less, half earn more.
If you’re fact-checking the calculations, you’ll see they don’t match up exactly. For example, using Lake County’s AMI, you’d do this: $62,900 x .50 = $31,450, whereas the USDA lists $31,950. These slight variations are likely due to USDA including non-wage sources of income in the household, such as child support, SSI, or alimony. The income numbers represent the maximum allowable to qualify for each category. Therefore, a Lake County household of 2 with an income of $31,900 would qualify for Very Low Income programs; however, if the income were $32,000, they’d be in the range for Low Income programs.
|Lake County||Number in the household|
|50% AMI (Very Low Income)||$ 31,950||$ 42,200|
|80% AMI (Low Income)||$ 51,100||$ 67,450|
|Sumter County||Number in the household|
|50% AMI (Very Low)||$ 33,400||$ 44,100|
|80% AMI (Low)||$ 53,450||$ 70,550|
Many myths abound regarding what ‘affordable’ means for housing and who qualifies for such programs. It’s no exaggeration to say that every legitimate program that strives to help people keep their housing cost affordable (paying no more than 30% of their income for housing) is using the same foundation: the AMI.
In our next installment, we’ll put a few sample budgets to the test. We’ll take various monthly incomes at different hourly wage rates, and we’ll allocate the money to expenses using generally-accepted financial advisor recommendations. In doing so, we’ll see what percent of the typical income goes to housing versus the recommended 30% figure. And we’ll be able to answer the question: at what income is housing affordable for Lake and Sumter Counties?
Your turn: How does your income, or that of your employees, compare to the AMI for Lake or Sumter counties? How do you think this affects the amount of money left, after housing is paid, to cover all other living expenses? –> Respond to us on facebook with your thoughts to continue the conversation
Article By: Lee Owen, Habitat Volunteer
The holidays are times when traditions are born, when gathering together holds more sentiment and when houses become homes. Whether your welcoming in generations of family and friends, or your traveling hundreds of miles to spend time with your loved ones, the phrase “Home for the Holidays” stirs emotions in all of us. However, for those dealing with the chaos caused by a sudden change in their living situation, the holidays are often accompanied by constant reminders that their sense of home has been washed away.
Surviving the utter destruction that swept through Puerto Rico with Hurricane Maria was just the beginning of an arduous journey that led Yolanda and Osvaldo to Central Florida and ultimately to Habitat for Humanity. “The experience was horribly devastating,” says Yolanda. “We lost our electricity, we lost food and there was no water. A lot of lives were lost on the island.” In fact, nearly 3,000 deaths we’re caused by the hurricane.
With the help of a church located in the states, the couple fled their home in Puerto Rico, destined for Sanford, Florida, with only the belongings they could carry in two suitcases. After spending their first month in a hotel in Sanford, they were able to find an apartment in Casselberry. However, after their first year in the apartment, the rent was set to increase to a point that would challenge their means.
“I started searching in August for other options, rental opportunities, but none suited our economic abilities,” said Yolanda. “I turned on the news and an interview that mentioned a community being developed by Habitat for Humanity caught my attention.”
The community was Habitat for Humanity’s Veteran’s Village in Umatilla, Florida. Veteran’s Village is a collaborative project that provides access to affordable quality housing and holistic wraparound services through a partnership with Combat Veterans to Careers.
“There’s our House!” Yolanda remembers saying to her husband. What she didn’t remember was hearing any contact information. A week went by and, while in prayer and searching the internet, Yolanda found the information she was looking for and, after confirming her husband Osvaldo was a Veteran of the Vietnam war, they began the process.
The couple celebrated their first Christmas in their new home with their children who traveled to spend the holidays with them. “Our new home was full of joy, many emotions and gratitude,” said Yolanda. They also brought with them the tradition of “Three Kings Day,” a Latin-American celebration akin to the “Feast of the Epiphany,” along with songs from the island and traditional holiday cuisine.
“In Puerto Rico, everything is decorated with lights during the Christmas season and that’s exactly what we did here,” said Yolanda. “We decorated the outside of our house as well as the inside with our Christmas Tree.”
The couple says the warmth of their new community has contributed to them feeling at home. They’ve developed “marvelous friendships,” sharing meals and great conversations with their new neighbors.
Having a “home” again was more than just finding an affordable place to live for Yolanda as Osvaldo. “In this stage of our lives, my husband and I are enjoying the peace and tranquility which God has gifted us through our new house,” she said. “And a house becomes a home by the love that is shared in it.”
Maybe you aren’t cost-burdened. You don’t have to decide between paying the light bill or buying food. And neither do your friends or neighbors. Maybe you’re thinking this whole issue of affordable housing doesn’t affect you.
A 2014 report by Enterprise Community Partners (here) should make us all pause and reconsider. The lack of affordable housing has measurable impacts on families, communities, and society overall. The report on housing instability, including homelessness, presents their findings by major issues; below is an excerpt of just three of these issues we can all relate to:
• Education — Housing instability/homelessness (HI/H) jeopardizes children’s performance and success in school and contributes to long-lasting achievement gaps. The stress of HI/H makes learning difficult; in addition, it disrupts school attendance, lowering students’ overall academic performance. Long-term academic success is directly impacted by housing stability.
• Health — HI/H has serious negative impacts on the health of children and adults. Problems include asthma, being underweight, developmental delays, and increases the risk of depression, to name a few. Affordable housing provides stability, freeing up resources for nutritious food and health care.
• Neighborhood Quality — The report states that “A number of national and regional studies have found that investments in affordable housing produce benefits in the form of jobs, local income, sales, increased property values and property tax revenues…” and “…Numerous studies show that affordable housing has a neutral or positive effect on surrounding property values…”
Let’s bring this closer to home. In October 2017 the Orlando Sentinel published the results of a study done by the Shimberg Center for Housing Studies at the University of Florida and Miami Homes for All, a South Florida nonprofit. The research focused on student homelessness; the Sentinel’s article (“Central Florida’s Homeless Students Top 14,000”) can be found here. According to the study, “…only 24 percent to 27 percent of homeless students passed assessment tests, while 40 percent to 48 percent of other students did.” They had higher rates of truancy and suspension, and “Even compared with students who live in poverty but are not homeless, the students whose families stay in shelters, cars, doubled up with another family or in extended-stay hotels fared significantly worse…” The Sentinel quotes Christina Savino, Orange County Public Schools senior administrator for homeless and migrant education: “…that lack of a stable home still really makes a difference.”
The lack of affordable, stable housing eventually ripples through all aspects of the local community and economy. While you might not be cost-burdened based on your income, your larger community, including the central Florida region as a whole, suffers when families are priced out of a stable place to call home.
Your turn: Contact a local food pantry, teacher, community police officer, or health clinic and discuss the issues they see related to housing instability/homelessness. For example, ask the food pantry how hunger affects their clients’ choices on other critical needs; ask a teacher how hunger affects a student’s classroom behavior and academic progress; ask a local police officer how the lack of affordable housing affects crime; ask a health clinic about the impact of delayed medical attention on children and families. Who else might you discuss the topic with? Share your experiences with us!
Affordable Housing Part I: The A, B, Cs
A is Also for Affordable Alternatives
Housing burdened. That’s the diagnosis if you’re paying more than 30% of your household income in rent/utilities. If you’re paying 50% or more, then you’re extremely housing burdened, but you probably already knew that! Whether you’re renting or trying to buy a house, are there options for finding something that fits your budget?
The good news? Yes, many programs help with renting or buying, based on location, income, family size, and other criteria. Their goal is to keep you at/under that 30% benchmark. Habitat for Humanity Lake Sumter is one of them, though we’re a small non-profit rather than a government-funded agency. If you’re hoping to buy a home in Lake or Sumter County, FL, consider starting with us. Review our Home-Ownership Qualification Criteria here: https://habitatls.org/programs/apply/.
For more comprehensive options, explore what’s offered by the Federal government, as noted in the links below; we’re sharing content from these websites as well.
The bad news? Finding the right one takes a lot of time and effort, and there’s often a long waiting list to access these programs.
Renters: The U.S. Department of Housing and Urban Development (HUD) is the mothership of programs and information. Start here https://www.hud.gov/topics/rental_assistance and use their links:
- Privately owned subsidized housing – HUD helps apartment owners offer reduced rents to low-income tenants. Search for an apartment and apply directly at the management office.
- Public Housing – affordable apartments for low-income families, the elderly, and persons with disabilities. To apply, contact a public housing agency (PHA).
- Housing Choice Voucher Program (Section 8) – find your own place and use the voucher to pay for all or part of the rent. To apply, contact a public housing agency.
- HUD Resource Locator – search for HUD field and regional offices, local PHAs, Multifamily and Public Housing locations, homeless coordinated entry system points of contacts, and USDA (Department of Agriculture), which focuses strictly on rural housing
Were you surprised to see the USDA listed? Their programs cover rentals, home purchases, and even repair grants. https://www.usda.gov/topics/rural/housing-assistance
- USDA Rentals: Click on the state and keep going as prompted. https://rdmfhrentals.sc.egov.usda.gov/RDMFHRentals/select_state.jsp
Home Buying: Both HUD and the USDA are good sources for home buying information, guidelines, and financial input. Check these links to learn more:
- HUD: https://www.hud.gov/topics/buying_a_home
- HUD: Housing counseling agencies throughout the USA offer advice on buying or renting, credit issues, and more. https://apps.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
- USDA: Home buying loans for low and very low income people in qualified rural areas: https://www.rd.usda.gov/programs-services/single-family-housing-direct-home-loans
Your turn: Find an affordable apartment for a) your elderly uncle (monthly income $960) or your cousin (a single mom with a pre-schooler, earning $15/hour working 40 hours/week). Rent + utilities cannot exceed 30% of the total monthly income. Using the resources above, find what programs are offered in your area; are they in a city or a rural area? What restrictions apply? Is there a wait list? How long? You have one week to find it…GO! Don’t forget to share what you learned in this process on our FB page, https://www.facebook.com/habitatls/
A is for Affordable…
“Can we afford it?”
This is one of the first questions any renter or home buyer should be asking. But what, exactly, does ‘affordable’ mean? What’s affordable to you might not be to me. Is this just a philosophy about how to handle money or is this something more concrete and measurable?
It’s actually very straight-forward. The term ‘affordable housing’ means that the household spends no more than 30% of their total household income on rent plus utilities.
Because households need money left over to pay for things like food, transportation, and healthcare—known as non-discretionary spending (these are ‘needs’ not ‘wants’).
“Housing expenditures that exceed 30 percent of household income have historically been viewed as an indicator of a housing affordability problem. The conventional 30 percent of household income that a household can devote to housing costs before the household is said to be “burdened” evolved from the United States National Housing Act of 1937” (1).
The Housing Act created the nation’s public housing program to serve families with the very lowest incomes. Since then, a variety of definitions were used to establish what was considered ‘affordable’ for public housing rents. By 1981, the 30% benchmark was put into place and has remained the standard.
This benchmark eventually became part of the home-buying process when lenders began using it as part of their evaluation of a buyer’s ability to repay the loan, especially if the borrower had other debts to pay. However, in mortgage-lending land, “rent plus utilities” was replaced by the PITI factor: this is the combined total of the loan’s Principle, Interest, Taxes, and Insurance. “Through the mid 1990s, underwriting standards reflected the lender’s perception of loan risk. That is, a household could afford to spend nearly 30 percent of income for servicing housing debt and another 12 percent to service consumer debt. Above these thresholds, a household could not afford the home” and the lender wouldn’t take the risk of the buyer defaulting (1).
This benchmark helps families and landlords or lenders objectively gauge the household’s ability to handle the financial burden of the monthly housing payment. Whether it’s a rental or a purchase, then, it’s a very helpful tool and one we’ll come back to later in this series. The big question now is: based on this definition of ‘affordable’ what are my options if I can’t find a place I can afford?
If that’s the case, then it’s time to look at the variety of programs in place to help make housing affordable, whether it’s a rental or a home purchase. We’ll look at some of those next time and also consider why affordable housing is important…not just for a family but also for the entire community.
Your turn: Calculate what percent of your household income is used to pay for your housing (rent + utilities, or mortgage PITI). Next, ask others you know to do the same. Consider asking employees, young singles or marrieds, etc. Discuss how your and their situations would look if 50% or more of your total household income went to pay for housing. What other expenses would be affected?