Rebecca Thompson was about to sign a lease for an apartment with a friend in early 2020 when businesses started shutting down because of the Covid-19 pandemic. So instead, the 34-year-old decided to stay with her parents to save money. But with home prices skyrocketing in Dallas, she thought she’d never be able to buy her own home.
That changed suddenly in July when her employer, the Dallas Area Habitat for Humanity, announced a new employee benefit: $13,500 in the form of a forgivable loan to help with a down payment or closing costs on a home.
“After that meeting, there was a buzz in the air,” Thompson says. “Everybody was so excited.”
Thompson, a development associate, expressed her interest right then and there. “I was literally the first person,” she says. “I don’t even think the slide had gone off the screen.”
To receive the down-payment assistance, Thompson is taking part in a program for first-time home buyers, just like the one Habitat offers to its clients. Counselors break down her finances to help her see what she can afford and how she can save. They explain down payments, closing costs, mortgage insurance, what to look for in a home inspection, and other costs and complexities of home buying and ownership.
Thompson hasn’t begun looking for a home yet, but she hopes that with the down-payment assistance she can find one with two bedrooms so she can have a home office. Plus, her cats and lizard could use some extra space. She loves growing her own food, so outdoor space for a garden is important, too.
Thompson is excited about the prospect of moving out of the cramped bedroom in her parents’ home. “It’s been hard for them to watch me struggle a little bit in this economy,” she says. “They’re excited that I’m going to be able to take this step.”
Reason to Stay
The Dallas Habitat received a $9 million gift from philanthropist MacKenzie Scott in March. That sum of money — more than the $7 million in total contributions it raised in 2020 — allowed the group to think big and creatively, says CEO David Crawford.
The organization was developing a program for corporations that would enable them to refer employees to Habitat for counseling on home buying and, in some cases, down-payment assistance. The group decided to use some of the Scott gift to develop a similar program for its own employees. It will spend the rest to purchase land on which to build homes for its clients.
Crawford says that while employee turnover has not been unusually high, hiring new employees has been a challenge given very low unemployment rates. With increasing home prices, higher interest rates, and inflation, it was clear that homeownership was a challenge for many of the group’s staff. He hoped a program to help put homeownership in reach would make more employees want to stay and encourage new ones to join the organization.
If this helps us recruit someone and bring them in more rapidly and then keep them, it’s been money well spent.
While the program has costs, they are less than they seem. Recruiting a new employee can cost $7,500 to $12,500, he says. “If this helps us recruit someone and bring them in more rapidly and then keep them, it’s been money well spent,” he says.
The program is limited to employees who make less than 120 percent of the Dallas area median income — $116,800 a year for a family of four. Depending on employees’ income, they might qualify to buy a home built by the Dallas Habitat or a home on the open market. The loan is forgiven if the employee stays at the organization for five years. Each year 20 percent of the total loan amount is forgiven; if the employee leaves the company in less than five years, that person must repay the remaining balance on the loan.
The group also works with lenders that provide home loans requiring down payments of 0 percent to 3.5 percent of the cost of the house. Some of the lenders also have their own down-payment assistance programs, says Blaine Cowart, the group’s vice president of homeowner services, who designed the employee benefit.
“There has been a ton of excitement about this program,” Cowart says. “I have had countless employees come and visit me personally and share their interest in it.”
Rising Prices
It’s no surprise that employees are so interested. A July report from RE/MAX found that Dallas had the highest home appreciation in the country in June. The median home price was up almost 30 percent from June 2021.
Affordable homes have virtually disappeared from the market in the Dallas area. In the second quarter of 2017, 31 percent of homes sold for less than $200,000, according to data from the Texas Real Estate Research Center at Texas A&M University. In the second quarter of 2022, only 4 percent did.
Prices have risen so fast because competition for homes has been fierce, says Todd Luong, a realtor with RE/MAX DFW Associates. He says that since the pandemic lockdowns began in 2020, out-of-state buyers have flocked to the Dallas-Fort Worth area, drawn by the once-affordable housing market.
Investors also began buying up property, particularly big new firms like Opendoor Technologies and Offerpad, which make all-cash offers on homes that appeal to sellers. Luong says last year 50 percent of Dallas home sales went to institutional buyers who fix up the homes and resell or rent them.
These buyers tend to purchase the homes that first-time buyers are after because they can make more money when they resell them, Luong says.
The Habitat program targets a persistent problem for people with low and moderate incomes — the difficulty of saving for a down payment, says Clare Losey, an assistant research economist at Texas A&M’s Texas Real Estate Research Center. She says the current housing market and the economy have only exacerbated the problem.
Right now, wages are rising only a few percentage points a year while home prices are jumping by 25 percent or more, and inflation is increasing the cost of everyday items. That all makes saving money even harder.
Losey says that a long history of research shows that down-payment assistance programs are the most effective way to help low- and moderate-income people purchase homes. “A program like this that Habitat is providing for its employees is a huge benefit,” she says. “Saving $13,000 on a household income of, say, $50,000 is going to take years and years.”
She says the sum the group is offering is about right. According to a housing-affordability report Losey co-authored, in the second quarter of 2022, the price of a home for first-time buyers in Dallas, Fort Worth, and Arlington was about $330,000. For a home at that price, the 3.5 percent down payment many lenders require for first-time buyers would be $11,550.
Targeted Benefit
It’s rare that nonprofits take such bold steps when they design employee benefits, says Eric Salyers, a senior consultant of benefits at Nonprofit HR, a human-resource consulting company. But increasingly nonprofits need to think bigger and be creative to retain and attract new staff.
Nonprofits historically underpay their employees compared with for-profit companies. Many groups try to make up for low wages with their benefits, but with competition for employees tight right now, and with increasing concerns about equity in the workplace, just adding vacation days isn’t enough. He argues organizations need to start thinking about ways to tailor benefits to lower-income employees who have been hit particularly hard by inflation in more meaningful ways. It’s OK, he says, that this benefit does not apply to everyone.
The new benefit also fits with Habitat’s mission of providing housing. It reinforces the idea that the organization is committed to housing both for the community and for its staff.
Everyone at Habitat was excited about the program, Thompson says. “Even for people that aren’t using it, I think it’s really nice to know that you work for a place that wants to invest in you,” she says. “And it hopes that you invest in your future.”
