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Pinnacle e-Letter Build a Home, Build a Future Housing remains the cornerstone of wealth for most Americans, yet the dream of home ownership is just a fantasy for most low-income Americans. The median price for a home in Davidson and its surrounding counties is more than $178,000. Conservatively, it would take at least $8,000 in down payment and closing costs to get into such a home. For the four-person household currently existing on a median income of about $52,000, spending around 15 percent of their entire year's income upfront for a house is out of the question. It leaves far too little money for necessities like food, clothing, transportation and health care. The alternative? These families rent, never building home equity for their own financial security or that of their children. Homeownership can transform low-income households emotionally, socially, and economically. For example, a study by the Joint Center for Housing Studies at Harvard University found the impact of home ownership and its positive impact on the home environment results in the children of owners having higher math and reading scores and fewer behavioral problems. Those who own a home have a significant wealth advantage over renters. Among those under age 40 with incomes in the $20,000 - $50,000 range, owners have ten times the median net wealth of renters. Fully half of their $45,640 net wealth is in the form of home equity. Among households in their 40s and 50s with incomes in the same range, the discrepancy is even bigger - $88,000 versus $6,430 - with home equity again contributing half of owners' wealth. Developing equity builds financial security and prevents financial devastation in the event of a job loss or medical emergency. Borrowers lower their debt costs by tapping home equity. Equity provides families with financial resources for goals such as paying for college and saving for retirement. As housing wealth increases, consumers spend more. Whether on home improvements, education, clothing or entertainment, homeowners keep the economy healthy. Over the past 50 years, housing expenditures have accounted for between 20 and 25 percent of the U.S. gross domestic product. Given this, doesn't it make sense that we all support efforts to increase the stock of affordable housing in our communities? In the past six years Pinnacle has partnered with excellent organizations - the Federal Home Loan Bank of Cincinnati, Habitat for Humanity, the Down Syndrome Association of Middle Tennessee and Affordable Housing Resources to add roughly 100 affordable homes to the housing stock here. This includes a $250,000 effort largely funded by one of our investment banking partners, Hovde Financial, to provide down payment and construction cost assistance to 10 families that typically would not even be able to qualify for Habitat homes in Rutherford and Davidson counties this fall. When Pinnacle merged with Cavalry Bancorp last year, Hovde Financial waived a portion of its fees in return for Pinnacle using the amount to benefit a non-profit in its communities. While financial institutions are legally required to give affordable housing assistance in the communities we serve, we believe there's an even more compelling reason to get involved. Home ownership is the best path to financial independence for low- and moderate-income families. So, supporting affordable housing efforts isn't just a good thing to do. It's a sound economic investment that will pay off in stronger financial health for families, our community and our economy. Terry Turner is President and CEO of Pinnacle Financial Partners. Pinnacle received the Community Partnership Award from the Federal Home Loan Bank of Cincinnati in 2005 for its work helping to provide affordable housing. |
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