Wisconsin has created a special fund that will buy houses for low-income families so that they do not overpay

New Milwaukee Home Acquisition Fund hopes to buy homes ahead of investors, renovate at least 100 homes annually and sell them to low-income buyers starting next year, reports MarketWatch.

Photo: IStock

For low- and middle-income homebuyers, the prospect of going hand in hand with cash-paying investors for simple, affordable housing can be daunting, if not financially impossible.

But in Milwaukee, one nonprofit thinks it can level the playing field.

Earlier this month, Acts Housing launched an acquisition fund to buy single-family homes that would generally be attractive to out-of-state investors hunting for more rental properties, part of a phenomenon that has gained more attention amid skyrocketing home prices across the country. Unlike low- and middle-income buyers, investors can also purchase off-market homes for cash without any contingency, making it difficult to compete.

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However, with a $1 million operating grant from the local Zilber Family Foundation, Acts Housing hopes to use the same mechanisms to remain competitive and also offer sellers some morale to work with us and you will provide opportunities for those people increasingly excluded from the market.

“Without any market turmoil, we are seeing this continued influx of investor capital, leaving low- and middle-income families, mostly black and Hispanic families, not getting a fair chance to buy a home,” said Michael Gosman, President and CEO executive director of Acts Housing, which provides services to families of low- and middle-income tenants who want to become homeowners.

The Group will acquire the houses by selling them directly to individual buyers. She will also buy property from investors, Gosman said.

Acts Housing is currently raising a $10 million grant for a revolving fund that will allow it to buy and renovate at least 100 properties each year starting in 2023, Gosman said.

The organization has already purchased its first home, said Dorothy York, the group's vice president of real estate, describing the house, previously owned by the investor, as a three-bedroom property that cost $90, with another $000 spent on renovations. According to her, Acts Housing is now looking for a family to live in the restored house.

According to Yorke, this will put real estate in an advantageous position in the city in terms of affordability. For families served by Acts Housing, an affordable home typically costs between $125 and $000. In July 150, Milwaukee homes sold for an average price of about $000, up 2022% from a year earlier, according to Redfin.

However, these relatively cheap homes are equally attractive to investors looking to increase their rental portfolios. And Milwaukee isn't the only city grappling with that reality: According to congressional hearings in June, investors poured money into rental properties across the country.

According to this hearing, targeted homes were often located in communities with higher-than-average populations of people of color, raising concerns that the already low homeownership rate among black Americans will continue to worsen as prices rise.

Taig Whaley-Smith, executive director of the Local Community Development Alliance, a Milwaukee-based coalition of stakeholders focused on advancing racial justice through affordable housing, who also partnered with the acquisition fund, said the goal is to bring these types of single-family homes back. to the property.

“The housing system has become unstable because people don’t own their homes,” Whaley-Smith said. “When you own your home, you know what your rent is going to be for the next 30 years, and you can invest in your family, invest in your home, invest in your community.”

In Milwaukee, where nearly 39% of residents are black, the number of single-family or semi-detached homes owned by out-of-state landlords has quadrupled since 2005, according to a statement from Acts Housing. The statement said investors have snapped up 40% of the city's available homes for $125 or less.

Other cities are facing similar problems and offering similar solutions - buying property before it's sold to investors who want to rent it out at inflated prices. The Cincinnati agency made headlines earlier this year when it killed more than a dozen firms to buy nearly 200 local homes and keep them as affordable housing.

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“We make a promise to families who seek our services that if they do everything right, we will qualify them for the best financing available and help them find the home that fits their needs,” Gosman said. “Right now, our families aren’t finding these homes as often as we’d like.”

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