Iowa City Creates Path to Homeownership

Community Challenge

The South District of Iowa City has historically faced challenges common to many urban neighborhoods, such as high rental occupancy and economic instability. With 89 percent of properties in the area serving as rentals, the community suffered from limited homeownership opportunities, resulting in few paths for residents to build wealth through housing.

Compounding this issue was the area's history of underinvestment and infrastructure neglect, making the neighborhood less desirable to potential homebuyers and perpetuating a cycle of low property values and insufficient resources. Over a decade, homes in the South District saw an average decrease of $2,420 in assessed values, further exacerbating disparities in housing equity.

The South District is one of Iowa City's most ethnically diverse areas, with nearly half the population identifying as people of color. This demographic profile underscored the importance of a community-centered, equitable approach to planning, as it was critical to ensure all residents could access stable, affordable housing without the potential for displacement. These challenges prompted the city to implement a targeted intervention to revitalize the neighborhood and create sustainable pathways to homeownership for long-term residents.

Planning Solution

In 2019, Iowa City launched the South District Home Investment Partnership Program, an initiative designed to help residents achieve homeownership and revitalize the neighborhood.

Central to the program's approach was the city's decision to purchase vacant or underused properties and rehabilitate them with a focus on sustainable and cost-efficient living. The rehabilitation process included extensive upgrades, such as energy-efficient technologies, solar panel installations, and comprehensive structural repairs. These improvements aimed to lower long-term utility and maintenance costs, making homeownership attainable and sustainable for low-income residents.

A primary goal of the program was to help residents transition from renting to owning, providing them with the stability and financial benefits that come with homeownership. To achieve this, the city allocated local and federal funds to cover a portion of each property's purchase price, along with an additional budget for renovations. Using these funds, the city was able to sell homes at below-market prices and provide up to $25,000 in down payment assistance for income-qualified buyers. This approach helped reduce financial barriers for prospective homeowners, allowing them to secure affordable mortgages with low monthly payments.

Iowa City prioritized community engagement in designing the South District Home Investment Partnership Program by collaborating with the South District Neighborhood Association, advocacy groups, and residents to gather feedback and align the initiative with their needs. Additionally, the city partnered with Habitat for Humanity to create an educational component in which new homeowners are required to take classes in basic home maintenance. The classes ensure that residents have the financial literacy and skills needed to succeed in their homeownership. The program also required that buyers sign a deed restriction agreement requiring the home to remain owner-occupied. Through this comprehensive approach, the program not only made homeownership accessible to low-income residents but also ensured long-term neighborhood stability and investment in the South District's future.

Outcome

The South District Home Investment Partnership Program has already demonstrated positive impacts in the community. In 2021, Iowa City received the HousingIowa Innovation Award, recognizing its leadership in advancing housing opportunities for Iowans. New homeowners within the program are experiencing housing costs that are well below the local market average for rentals, offering an immediate improvement in financial security and monthly savings. Early participants in the program have been long-term residents, some of whom were renters in the South District in the years before purchasing their homes. This continuity underscores the program's focus on empowering existing community members, allowing them to build equity and strengthen their connection to the neighborhood.

Iowa City is actively monitoring the program's success through metrics such as reduced nuisance complaints, increased property values, and economic diversity among new homeowners. Further, the city's partnership with Habitat for Humanity to deliver financial counseling and homeowner education has built a well-prepared homeowner base equipped to handle the responsibilities of ownership. These initial successes indicate that the program has begun addressing both the economic and social needs of the South District community.

Considerations for Your Community

The South District Home Investment Partnership Program has positively impacted a community that a decade ago was struggling from underinvestment and a lack of pathways to homeownership, leaving many residents without opportunities to build wealth or achieve long-term financial stability. Through affordable, energy-efficient housing, the program has lowered costs for families and improved the overall quality of life in the area. By engaging with residents, city officials were able to identify the specific needs and aspirations of the community, ensuring that the program addressed relevant issues rather than imposing top-down solutions. This approach encourages community buy-in and maximizes the program's positive impacts by aligning with the residents' goals for their neighborhood.

Combining federal and local funding to cover property purchases, rehabilitation costs, and down payment assistance significantly lowers financial barriers for income-qualified buyers. Deed restrictions and ownership requirements, like mandatory classes, help protect the neighborhood's affordability. Programs that combine financial assistance, sustainable housing practices, and long-term affordability safeguards can not only make homeownership accessible but also promote stable, resilient neighborhoods where residents have a stake in their community's future.

Top image: iStock/Getty Images Plus - dangarneau