Housing prices rose about 4% nationwide from February 2022 to February 2023, according to a recent report from the Federal Housing Finance Agency, which tabulates changes in single-family housing prices from all 50 states and about 400 cities.
The East South Central census track, of which Kentucky is a part, saw an increase in housing prices of 2.3% during the same period.
The Northern Kentucky HOME Consortium, an inter-city collaboration aimed at increasing home ownership in the region, confronted this reality at its annual meeting on April 27, during which the mayors in attendance unanimously voted to bring Florence into the fold. A representative from Florence was not in attendance.
The HOME Consortium already included the cities of Bellevue, Covington, Dayton, Erlanger, Ludlow and Newport. The addition of Florence will add about $100,000 in annual federally allocated funds toward affordable housing in the region, according to Covington’s Community Development Block Grant and HOME Coordinator John Hammons, who is responsible for managing both the HOME Consortium and Covington’s Community Development Block Grant program.
The HOME Consortium offers forgivable loans of up to $10,000 to help qualifying people cover down payments and other closing costs with purchasing a house or similar property — costs that are often difficult to save for.
“The home buyer loans this year have been slow,” Hammons said. “It’s a tough market.”
To be eligible for a HOME loan, buyers must meet the following criteria in addition to being a resident of one of the consortium cities:
- Their gross annual household income be at or below 80% of the area’s median income as set by HUD, which is $53,000 for a single person and $76,400 for a four-person household
- They must attend a HUD-approved home buyer education course
- The properties they wish to purchase must be one to two units, either owner-occupied or vacant
- The properties must meet minimum local housing standards
If accepted to the program, the buyer is eligible for a 0% interest rate loan with no required monthly payments. One tenth of the loan will be forgiven for every year the owner occupies the property. If they occupy the property for 10 years, the loan is entirely forgiven. The home buyers would still be responsible for financing the remainder of the house purchase through a conventional lender.
According to Hammons, the program received about $338,467 in federal funds this year. The program allows unused money to be carried over from previous years, and since the projects slated to occur in Newport didn’t happen last year, the program now sits on $939,867.
Despite the influx of money, Hammons said there wasn’t much of a demand for home buyer loans, given the difficulties of the housing market generally. Lower and middle-income people are struggling to find affordable housing.
Moreover, many developers aren’t investing in building starter homes due to higher costs, making it more difficult for lower earners to purchase property.
Eleven loans were issued through the program between July 1, 2022 and April 27, 2023.
City No. of Approved Loans Home Funds Expended Bellevue n/a $0 Dayton 3 $26,441 Erlanger 2 $20,000 Ludlow 2 $20,000 Newport 4 $40,000
“We’re budgeted for 25,” Hammons said.
In previous years, the program had issued loans up to $5,000, but Hammons commented that those failed to cover many of the initial costs of buying a house. He added that if the $10,000 loan amount proved to be inadequate to attract qualified people, they could revisit the amount next year.
Dayton Council Member Beth Nyman asked why more people weren’t qualifying for the program.
“Why are we having difficulty?” Nyman asked. “Because people aren’t qualifying, because prices are higher, because they don’t know about the program, because a mix of all three?”
“I think because a mix of all three,” Hammons replied.
The HOME Consortium also invests in development projects throughout the region.
The public may submit suggestions on how the cities should spend both HOME Consortium and Community Development Development Block Grant money until May 7.
A draft of the programs’ plans for next year is available online. To submit comments, contact Covington’s Community Development Manager Jeremy Wallace at (859)292-2147 or jwallace@covingtonky.gov.
If you would like to apply for a HOME Consortium grant, visit its online application portal.
If you have questions about the HOME program, you can read the current plan on Covington’s website or contact John Hammons at either (859)292-2105 or jhammons@covingtonky.gov.