Homeownership in Michigan – Trying to Help Families Capture the American Dream

June is Homeownership Month, and Habitat Michigan’s Housing Counselors are more excited than ever to provide tools to current and prospective homeowners and renters so they can make responsible choices to address their housing needs. We are impartial and can help consumers make the decisions that are right for them by providing education and coaching services. But at the end of the day, what is the reality facing our brothers and sisters, sons and daughters who have worked hard to qualify to own? I don’t have to go far to find an example of the real life situations that we are facing today.

I need to correct one statement above - we are almost always impartial. My son and his family (including three beautiful grandbabies) purchased a home six years ago. It was a starter home, about 1100 square feet, and they paid around $95,000 in a recovering West Michigan buyer’s market. The PITI – MI (principle, interest, taxes, insurance and mortgage insurance) payment was about $940 monthly. Our newest grandchild put them over the edge space-wise and they decided to sell and upgrade to have more space for their growing family. After doing a few minor upgrades (the usual kitchen, bath and flooring attention), they put it on the market for $150,000. Twenty-five families came to the first open house on a Saturday and they had 8 offers on Monday. The home sold for $10,000 over the asking price after four days on the market. Oh, the joys of a seller’s market.

Seems like a great deal, right?  On the surface it may appear that way, but then reality sets in. Illness and family responsibilities have kept my daughter in law from working over the last few years, so the family is making life happen with one income. Strike one for higher mortgage qualification. They made all mortgage and utility bill payments on time, but medical bills and a bad car purchase from a “Buy Here, Pay Here” lot required a decision to rent while paying down debt and bills – strikes two and three. (Sue's Aside Comment: Moms have perspectives that kids don’t always listen to.) To make a long story short, they found a nice three bedroom home in a good school district to rent for one year while correcting credit barriers at the rate of $1,500 monthly plus all utilities. This is todays rental reality in West Michigan.

There are so many factors that go into the decision to purchase a home. The price and associated costs are important but far from the only decision. Things like initial costs (down payment and closing costs), recurring costs (mortgage payments, condo fees, maintenance and reno costs, property taxes and homeowner’s insurance) are important to consider. Then there are opportunity costs (property tax and interest deductions, investment opportunities instead of a down payment as well as potential net proceeds at the sale) all of which are, at best, risky prospects in today’s economy. Other factors like ability to save and planned length of residency are also important.

The bottom line is, sometimes it’s better to rent, and sometimes buying can work best if there are affordable homes available at all income levels.  We who love and work with Habitat Michigan find ourselves at a place where we can impact these major life decisions with great education and housing opportunities, topped off with a lot of love and patience for all God’s children - even mine.

Sue Ortiz

Family & Homeowner Support Director