Home Finance NHC Discusses Potential Benefits of Employer Assisted Housing Programs

NHC Discusses Potential Benefits of Employer Assisted Housing Programs

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By Catherine Sweeney 

A housing concept frequently utilized in the early 2000s could be a beneficial solution for first time homeownership, employee retention and much more. According to the National Housing Council, Employer Assisted Housing could help both employers and employees by boosting morale and providing much needed assistance to workers looking to purchase a home in the nation’s increasingly challenging housing market.  

“The concept of employer assisted housing was developed to basically be middle class golden handcuffs that would allow for companies to encourage employees to stay in their jobs while giving employees a benefit that makes it well worth their while,” David Dworkin, president and CEO of the NHC, said.  “And the benefit is the ability to buy your first home with material support for a down payment.” 

Created by Fannie Mae in 1991, Employer Assisted Housing is a down payment assistance program for employees looking to purchase their first home. The program worked by allowing new homebuyers a loan that would be forgiven by 20 percent each year for five years. If an employee utilizing the loan program left prior to the five-year mark, they would be responsible for paying the unforgiven portion of the loan. 

According to the NHC, prior to instituting the program, turnover at Fannie Mae was more than 20 percent. After its institution, however, turnover rates dropped into single digit numbers. The program’s success spread quickly with many employers across the country, including Howard University and the University of Pennsylvania, implementing the program. However, in the wake of the Great Recession, home values dropped and the program became largely unused. 

“This was very increasingly popular in the late 90s and early 2000s. With the collapse of the housing market in 2008, it fell out of favor because housing prices were down and home ownership was seen as not as valuable and unemployment made retention issues less common,” Dworkin said. “In today’s economy, when housing prices are high and rising and unemployment is continuing to fall and employers are really struggling with retention issues, Employer Assisted Housing is really a perfect solution to several of these problems.” 

This could be beneficial as housing prices across the country have grown to $331,531. Costs are even higher in many West Coast markets. According to Zillow, housing prices in Southern California markets, like Los Angeles and San Diego, have grown to $944,651 and $944,228 respectively. Likewise, in the Pacific Northwest, the average price for a home has reached  $932,382 in Seattle and $574,291 in Portland. San Francisco residents, however, are facing some of the highest home prices at an average of $1.9 million. 

While helping employees purchase their first home, the program could also have a positive impact on a company’s work environment, according to the NHC. The program can boost the overall mood of its employees by providing housing assistance while also bringing in new employees to the area and encouraging those living further away to live directly in the community they work in. In addition to cutting down on commute times for employees, living closer to work could also help employers by cutting down its carbon footprint. 

Further, Dworkin said the program also has positive implications for marginalized communities as many struggling to purchase their first home are disproportionately people of color and low income. 

While noting the many positive aspects of the program, the NHC also notes the various challenges associated with the program. Particularly, it may be difficult for smaller companies to adequately fund the program. The program could also be viewed as a tool for gentrifying neighborhoods. By bringing in more employees, Employer Assisted Housing could increase already increasing housing rates, further putting pressure on communities and those already living in them. 

“I think that one of the concerns that may be raised is, is this going to be a tool for gentrification? And the answer is, no, because we’re actually creating opportunities for people to live where they work,” Dworkin said. “This is not just about outsiders coming into a community. Though, many communities would welcome that because they need increased density. It is really about helping to strengthen communities with people who are already working in the area.”