Uses of HOME Funds

HUD reports a number of HOME program performance statistics. These include statistics on the types of completed units that have been assisted with HOME funding (rental units, home buyer units, and homeowner units,), the eligible activities funded with HOME dollars (rehabilitation, new construction, acquisition, and households that have received TBRA), and characteristics of households that benefit from HOME funds.

Types of Units (Homeowner, Home Buyer, or Rental)

Between the beginning of the HOME program in FY1992 and July 31, 2014, nearly 1.2 million units of affordable housing were constructed, rehabilitated, or acquired using HOME funding, and over 290,000 families were assisted through tenant-based rental assistance (TBRA). Together, this amounts to nearly 1.5 million completed units and TBRA-assisted households that have benefitted from HOME funds since the program’s inception.

Units assisted with HOME funds can be homeowner units (that is, existing owner-occupied housing that is rehabilitated with HOME funds), home buyer units (owner-occupied housing where HOME funds are used to help prospective home buyers acquire, rehabilitate, or construct the home), or rental units. Of the physical units that have used HOME funds since the program’s inception (that is, excluding households that received TBRA), home buyer units represent the largest share, followed by rental units. As shown in Figure 2, 42% of all completed units to date are home buyer units (about 490,000 units), 39% are rental units (about 460,000 units), and 19% are homeowner units (about 230,000 units).

Figure 2 .Completed HOME Units by Unit Type

Through July 2014

 

Source: Figure created by CRS based on data in HUD’s July 31, 2014 HOME National Production Report.

Note: Rental units only include physical units, and do not include households receiving TBRA.

In FY2013 alone, HOME funds contributed to a total of about 21,000 completed housing units and tenant-based rental assistance for nearly 13,000 households.

In addition to statistics on completed units, HUD also reports how much HOME funding was used for each unit type. Since the program began, over $28 billion of HOME funding has been spent on units that were completed as of July 31, 2014.As shown in Figure 3, nearly $16 billion (55%) of HOME funding that has been spent on completed units was used for rental units or TBRA, while $8 billion (27%) was used for home buyer units and $5 billion (18%) for homeowner units. Of the amounts spent on rental housing since the program began, about 95% (nearly $15 billion) has been used to develop rental housing units, while the remaining 5% (less than $1 billion) has been used for TBRA.

Figure 3. HOME Funds Spent by Unit Type Through July 2014 ($ in billions)

 

Source: Figure created by CRS based on data in HUD’s July 31, 2014 HOME National Production Report.

Note: Rental units include households receiving TBRA.

Types of Activities (Rehabilitation, Acquisition, etc.)

Eligible uses of HOME funds generally fall into four categories: owner-occupied housing rehabilitation activities, assistance to home buyers, rental housing development activities, and tenant-based rental assistance (TBRA). The HOME statute specifies that rehabilitation of both rental and homeowner units should be given preference over other types of eligible uses of HOME funds, such as acquiring or constructing affordable housing.

As shown in Figure 4, of the nearly 1.5 million housing units and TBRA households that have been assisted using HOME funding from the program’s beginning through July 31, 2014, nearly 500,000 (34%) were rehabilitated units, about 390,000 (26%) were acquired units, and about 290,000 (20%) were newly constructed units. An additional 290,000 (20%) of “units” were households that received TBRA rather than physical housing units.

Figure 4. Number of Completed HOME Units and Households Receiving TBRA by Activity Type

Through July 2014

 

Source: Figure created by CRS based on data in HUD’s July 31, 2014 HOME National Production Report.

Some activities are more expensive than others and require a larger investment of HOME funds. Therefore, the breakdown of total HOME funding used for each eligible activity looks somewhat different than the number of units completed for each eligible activity. For example, rehabilitated units accounted for just over one-third of the completed units (including TBRA) that used HOME funds, but the funds used for rehabilitation account for nearly 43% of total HOME funds expended on completed units (a total of about $12 billion since the program’s inception). Acquired units accounted for over a quarter of completed units that use HOME funds, but account for only about 15% of the funding (about $4 billion). New construction and TBRA each accounted for about 20% of completed units, but new construction accounts for nearly 40% of the funds spent (almost $11 billion) while TBRA accounts for only 3% of funds spent (less than $1 billion). Figure 5 illustrates the amount of funding that has been spent on each activity since the program began.

The difference between the percentage of funding going toward each activity and the percentage of completed units of each activity type reflects the difference in the average investment of HOME funds required for each activity. A newly constructed unit costs the most, on average: a newly constructed unit costs an average of $38,000 in HOME funds, while the average cost of rehabilitating a unit is $24,000 in HOME funds and the average cost of acquiring a unit is about $11,000 in HOME funds.

Figure 5.HOME Funds Spent by Activity Type

Through July 31, 2014 ($ in billions)

 

 

Source: Figure created by CRS based on data in HUD’s July 31, 2014 HOME National Production Report.

Whether a PJ uses HOME funds for rehabilitation, acquisition, or new construction depends in part on the types of programs it is administering and the housing needs it is trying to meet. As shown in Figure 6, about three quarters of home buyer units that receive HOME funds use those funds for acquisition costs (such as down payment assistance). A relatively small number of home buyer units use HOME funds for rehabilitation or new construction. In contrast, virtually all owner-occupied units with HOME investments use those funds for rehabilitation activities. For rental units that use HOME funds, about half of the units are rehabilitated. Most of the remaining HOME rental units are newly constructed, with just a small number of rental units receiving HOME funds for acquisition costs.

Figure 6.Type of Investments in HOME Units by Unit Type

Through July 31, 2014

 

Source: Figure created by CRS based on data in HUD’s July 31, 2014 HOME National Production Report.

Selected Characteristics of HOME Beneficiaries

HUD reports on certain characteristics of the households that benefit from HOME funds, including household income and household type (e.g., two-parent households, single-parent households, elderly households, etc.).

Household Income

As required by statute, all HOME funds benefit families with incomes at or below 80% of area median income. Not surprisingly, HOME funds used for rental activities (including tenant-based rental assistance and the construction, acquisition, and rehabilitation of rental housing) benefit a lower-income population than funds used for homeowner and home buyer units. As explained earlier in this report, HOME funds used for rental activities must target a lower-income population than funds used for homeowner or home buyer activities. Households at the lowest end of the income spectrum are also more likely to rent than to own their homes.

Figure 7 shows the share of units for each unit type (homeowner, home buyer, rental, or TBRA) that has benefitted households at different income levels. As of July 31, 2014, HUD reported that nearly 80% of HOME-assisted TBRA households were families with incomes at or below 30% of area median income (AMI), as were nearly 44% of occupants of HOME-assisted rental units. In contrast, less than one-third of HOME-assisted homeowner units benefitted households with incomes at or below 30% of area median income, and only 6% of HOME-assisted home buyer units benefitted households with incomes in this range.

Figure 7.Income of Households Occupying HOME Units

Through July 2014

 

 

Source: Figure created by CRS based on HUD’s July 31, 2014 HOME National Production Report. AMI is area median income.

Household Type

Overall, about 30% of HOME-assisted units (including households that receive TBRA) are occupied by single-parent households. Nearly another 30% are occupied by single, non-elderly households. About 18% apiece are occupied by elderly households and two-parent households, and about 5% of households are categorized as “other.”

As shown in Figure 8, different types of units are more or less likely to serve specific types of households. Specifically:

• Rental units assisted with HOME funds are most likely to be occupied by single, non-elderly households or elderly households, followed closely by single-parent households. Two-parent households are less likely to live in HOME-assisted rental units.
• HOME-assisted home buyer units are most likely to be occupied by single parents or two-parent households, followed by single, non-elderly households. Not surprisingly, few home buyer units are occupied by elderly households.
• By contrast, HOME-assisted owner-occupied units are most likely to be occupied by elderly households, as elderly households might be the most likely to seek HOME funds for repairs to their existing housing.
• HOME-funded TBRA is most commonly received by single-parent households, followed by single, non-elderly households.

Figure 8. Household Types Served with HOME Funds

Through July 2014

 

 

Source: Figure created by CRS based on data from HUD’s July 31, 2014 HOME National Production Report.