Home ownership pilot could be expanded
Two non-profits and the city create $3M mortgage pool to assist renters in becoming homeowners
A Hamilton non-profit is launching an innovative pilot next month to make home ownership a reality for local renters.
The program — launched by Kiwanis Homes in partnership with the Hamilton Community Foundation and the city — will see a “shared appreciation mortgage pool” of about $3 million help renters to qualify for a first mortgage, one of the biggest roadblocks to owning a home for low-income people.
To start, the pilot will help more existing Kiwanis tenants by covering up to 40 per cent of a down payment on the homes they’ve rented for years.
“These are people who’ve been living in our homes for 10, 20 years, and many of them are in a position where they want to purchase those homes but need a little extra help,” said Brian Sibley, executive director of Kiwanis, which operates around 200 single-family dwellings in Hamilton.
“With our system, they don’t just stay where they live but they generate long-term equity through ownership,” he added, noting the $3 million will subsidize the purchase of around 20 units.
The goal of the program — which it’s hoped will eventually expand to the broader city population — is twofold: turn renters into homeowners through investment, and then use returns from that investment to build more affordable housing units.
Sibley called the partners’ mortgage pool “patient capital.” After covering up to 40 per cent of a down payment and helping tenants qualify for their first mortgage, they don’t require any payment back for 25 years. “It’s sitting there as a second mortgage,” he said.
Once the initial mortgage matures, owners can either sell their homes or renegotiate, with the partners sharing the appreciation and then reinvesting those proceeds into affordable-housing development.
“This isn’t a gift but an investment,” Sibley explained. “These new homeowners are creating their own wealth, and the money we raise in this program is going directly into the building of new, affordable high-density units.”
“We need to have more opportunities to get people into affordable housing, not just only create more affordable units,” he later said, adding Kiwanis wants to build 1,000 affordable units by 2028.
If the pilot is successful and continued, it hopes to expand its services to two priority groups: people who can qualify for a mortgage but live in social housing units that aren’t for sale, and renters in the general community with low- to moderate-income.
Affordable units — either owned or rented — are of great need in Hamilton. As of Dec. 31, 2022, the city’s waiting list for subsidized units sat at 6,110 households.
It’s a crisis that requires outside-the-box thinking, said Terry Cooke, president and CEO of the Hamilton Community Foundation (HCF), which has committed $50 million to the crisis over the next decade.
Cooke said people often think about the solution to the affordable-housing crisis as building more units.
“And that’s true, but it takes a helluva long time and it’s very expensive, and it isn’t the only solution.”
Cooke added that the pilot between the partners relieves pressure on the market for affordable rentals and allows people to get a foothold in creating wealth in homes for which they already pay.
“It’s not the only solution, but we’ve got to try and be doing as many things as we can across the housing spectrum.”