Ohio launches program to boost supply of affordable homes

Like some other Midwestern states, Ohio faces twin threats to home affordability: climbing property taxes and real estate investment firms that buy up single-family homes only to rent them out at high rates. 

So on Jan. 11, Ohio Gov. Mike DeWine rolled out the Welcome Home Ohio program. A product of the Ohio legislature's biennium budget bill, House Bill 33, it will be administered by the Department of Development and will devote $150 million to making housing more accessible in Ohio.  

The new program will distribute $100 million in grants over the next two years to land banks for the purchase, rehabilitation or construction of residential properties in Ohio. It also makes available $50 million in nonrefundable tax credits to land banks and eligible developers for property rehabilitation and new construction. 

Bloomberg News

The application period for the grants ends at 11:59 p.m. on Feb. 9. Rolling applications will be considered from Feb. 12 to May 31 as funds become available. Tax credit applications will likewise be considered on a rolling basis.

The text of House Bill 33 says subdivisions or county land reutilization corporations may apply for the grants, and they're required to sell the residential properties only to individuals who occupy them as primary residences. 

Mason Waldvogel, the Ohio Department of Development's deputy chief of media relations, said that in addition to the WHO program, the governor's team has pursued other housing affordability policies including new tax incentives, targeted credits and savings programs.

Ohio's rate of owner-occupied housing stood at 66.8% as of 2022, according to Census data, with five counties in the 20% to 39.9% range and nearly all the rest in the 60 to 79.9% range.

"Ohio has a severe shortage of entry-level homes, but we're lucky to live in a state that's ready to innovate and problem-solve," said Carlie Boos, executive director of the Affordable Alliance of Central Ohio. "We have a very strong land bank network with the expertise to lead this work and prove the pilot program is worthy of being made permanent. As we do that, I'm optimistic that there will be space for other community-based organizations and nonprofits to help create the homes Ohio needs."

Boos noted that rising property taxes are pushing sustainable homeownership out of reach for many Ohioans. The AACO believes that local governments can be better incentivized to cut back on tax increases, she said.

More than 1 million Ohioans spent over half their income on housing in 2021, according to the 2023 Ohio Housing Needs Assessment. About 326,000 of those were single-family homeowners. A quarter of renters, or about 708,000 people, spent at least half their income on housing. 

"This is the first meaningful investment that the state has made in affordable homeownership, rather than multi-family affordable rental units," said Shawn Carvin, executive director of the Ohio Land Bank Association. "Although this initiative is a pilot, we are hopeful the legislature will continue to recognize the importance of investing in affordable housing."

Land banks have been key players in converting vacant properties into affordable housing, Carvin said. A recent Ohio Land Bank Association survey found 26 out of the 67 land banks in Ohio helped to develop or renovate over 5,000 homes from 2015 to 2023.

Some, such as the Franklin County land bank, have tried to innovate while doing so. The latter established a community land trust that retains ownership of the land while selling the house at a more affordable price, the goal being to counter the effects of rising property values.

"Beyond just providing homes, [land banks] have revitalized neighborhoods," Carvin added. He expects the WHO program to create roughly 1,200 affordable homes across Ohio. That's still a fraction of the gap Ohio faces: it needs 14,000 to 19,000 new homes per year to keep up with demand, but only 12,000 new homes are being built annually.

As for rental homes, Ohio has a shortfall of roughly 270,399 affordable rental houses, the National Low Income Housing Coalition, a research and advocacy nonprofit based in Washington, D.C., has found. It says households making around 30% of their area's median income spend more than half their yearly pay on housing and are more likely to sacrifice nutrition and healthcare to make rent payments.

"Increased institutional investor ownership in the rental market can have negative impacts on renters and has been associated with decreased affordability, increased fees, lack of upkeep, higher rates of eviction and worsening displacement," NLIHC President and CEO Diane Yentel said in Oct. 24 testimony before the Senate Judiciary Committee. 

NLIHC Senior Vice President of Research Andrew Aurand said homeownership is integral to building wealth for low-to-moderate income households, yet it can be tough for those households to become homeowners absent assistance programs like the one now launching in Ohio.

The WHO program sets the ceiling for eligibility to buy the residences built or renovated through the program at 80% of the median income for the county in question. But it also requires that the properties be sold to individuals who demonstrate the financial means to buy them — a requirement likely to shut out lower-income households — and who agree not to rent any portion of the property.

"Homeownership programs are important, but they don't solve the pressing problem that millions of extremely low-income renters face," Aurand said. He added that both the federal government and state governments need to invest more in housing assistance programs for lower-income households. 

Waldvogel, the state Department of Development spokesperson, confirmed that real estate investment firms are excluded from the WHO program as things stand.

"The DeWine-Husted administration is committed to working closely with the Ohio General Assembly to address housing access across the state," he said. "Through this program, we have the opportunity to support new investments in housing that will help cultivate vibrant neighborhoods and stimulate economic vitality."

DeWine said in a statement that while still a pilot program, WHO promises to support further population increases in Ohio.

"As our state continues to thrive, we expect that more people will stay in Ohio and move to Ohio, and the Welcome Home Ohio program will allow us to work proactively to ensure that there is enough housing to sustain this growth," he said.