An interesting series of articles appeared the recent November 2006 issue of Governing magazine. The main story, “Smart Decline”, describes the issues the city of Youngstown must consider as its population has dramatically declined in the past forty years, producing a glut of housing. Much of this housing is beautiful sturdy homes built in the earlier parts of the 20th century as Youngstown expanded beyond its central core.
The main article begins with a roadtrip through the city guided by chief city planner, Anthony Kobak. Two other question-and-answer pieces, one with Youngstown Mayor Jay Williams and the other with Hunter Morrison, Director of the Center for Urban and Regional Studies at YSU, are also available.
An interesting policy question develops from this situation . . . How can a city create effective polices to stimulate home ownership and the local housing market?
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Some cities partner with their educational institutions to provide incentives for their employees to become local homeowners. Yale University established the Yale Homebuyer Program in 1994, where employees of the university are offered $25,000 to purchase a home in certain neighborhoods. Their website chronicles the 700th home purchased as a result of this program – representing 5 percent of all homes purchased in the city.
Other cities such as Baltimore offer a laundry list of programs, such as $3,000 toward closing costs, matching grants, and loan assistance. Visiting DC recently, it was interesting to see the Live Baltimore housing program advertising on the metro.
But do any cities have an education-based housing incentive program? I have not looked around if one exists, but the program might work like this:
Let’s bundle “incentives” into one category. The carrots can include closing costs, property tax abatements, grants for remodeling historic infrastructure, or straight-up cash. The following total amount of incentives would be given to any new homeowner in certain neighborhoods within the city of Youngstown if they can prove they have a diploma from an accredited university:
Bachelor’s degree: $5,000 in incentives
Master’s degree or Law Degree (JD): $15,000 in incentives
PhD or MD: $40,000 in incentives
Of course other stipulations would be added to the program to prevent abuse. Limits on how often one can purchase a house, how much is actually offered, and if the amount is provided at once, or spaced out over time, are details to be considered by the finance department.
And some may argue this is just a form of welfare for those who in the future may be higher-wage earners. That is a legitimate concern, but I wonder if a new medical doctor at St. Elizabeth’s, fresh from medical school with massive amounts of debt, would utilize this program to purchase their first house in the neighborhoods close to the hospital.
Businesses already seem to enjoy this type of investment. For expanding business expecting to grow, the city provides grants and loans to assist. Why shouldn’t the same thing happen for individuals, who in the long run, may provide tens of thousands of dollars to the city coffers in the future?
A quote from Jay Williams within the Governing article got my attention. He said “The city spends upwards of $40,000 or $50,000 for income-eligible citizens to rehabilitate their homes. We've just done that based on a first-come-first-served basis.”
So the structure for this kind of program may exist already. Maybe the incentives can be extended beyond just income-eligible citizens, and go towards degree-holding citizens as well.
A recent post on this blog praised the city of Kalamazoo for its program to reward all city school graduates with a free college education. Housing purchases in Kalamazoo are up, but more importantly, the city sent a signal to the country that it was serious about education – and that concept was picked up by the nytimes in a story this week.
Of course, we want our policies to be effective, not just headline-grabbing, but wouldn’t it be nice for the city of Youngstown be nationally known as a place that rewards its citizens for attaining education? Would it not just improve the housing market, but send a message to the region and possibly the nation that we value higher education?
So would this idea work? Any thoughts?