Image by Mr.TinDC licensed under Creative Commons.

When lower income people rise to the middle class, it's good for everyone. It makes the city safer, improves the economy, and of course it's a huge social good on its own terms. Finding ways to help that happen is one of the most important things cities can do. And few things matter more to that equation than urban housing.

Affordable housing programs like the Ward 8 Homebuyers Club make it possible for many people with lower incomes to buy their own homes, and pull themselves up out of poverty. But with housing prices so high, critics argue that renters should invest in stocks rather than pay added costs of homeownership, like saving for a down payment.

That sort of criticism is off the mark. Let's talk about why.

Critics offer two broad arguments.

The first proposes that “some (repeat some) renters may be better off putting that potential down payment into a more diverse portfolio, both to generate better returns and to insulate against a housing-specific downturn.”

An investment in the stock market, the argument goes, will see more growth and thus build more wealth than would buying a home.

The second argument suggests that homeownership is not financially viable for low-income buyers, and therefore can't produce wealth for them. According to one commenter:

Homeownership is undesirable for a lot of people for a lot of different reasons (unstable employment, incomes too low to allow for enough cushion to pay for periodic maintenance issues, etc.) … so to push homeownership as a universal cure-all for family finances invites unintended social consequences to also occur.

This line of thinking focuses on the buyer’s ability (or inability) to make monthly mortgage payments and to deal with maintenance expenses that arise, like fixing a leaking roof.

Image by Tim Evanson licensed under Creative Commons.

Renting is a sunk cost, but a mortgage makes you money

Most times when people speak skeptically about homeownership as an investment, they see it as one of many different ways a person could invest their money. “Should money go to a down payment or a stock portfolio?” is the basic question. But while this kind of comparison might make sense for someone with disposable income, it doesn’t for low-income families, many of whom can’t even find money for traditional retirement accounts.

For them, the decision is much simpler: there’s not much extra money in the budget beyond what pays for housing, so most of their money must go toward either a rent check or a mortgage payment. And only one of those pays returns. Buying vs. renting is the difference between putting your monthly housing payments into a savings account or giving that money away each month, never to see it again.

If you can afford housing, you can probably afford homeownership, even in DC

It's true that buying a home is difficult, and down payment requirements are daunting. But there are easily-accessible programs to help with those problems. With them, you don’t need a huge sum of money to get a mortgage.

Thanks to programs like DC’s Home Purchase Assistance Program (HPAP), low-income buyers are normally making down payments closer to 5% than the 20% that many people assume is necessary. Less than $10,000 is often enough. That's still a large chunk of money, but it's much more accessible than many people believe. And it's worth noting that Wall Street is considerably less charitable about its own start-up costs.

Because of programs like HPAP, and countless others from state and federal governments, low-income buyers often end up paying less each month in mortgage payments than they were paying in rent. That's especially true once they've owned for a few years, with a stable mortgage in place of annually rising rents.

This was substantiated several years ago when George Mason University conducted a review of census data for the DC area. They found that even when residents were broken down into income categories, low-income buyers were significantly less likely to be cost burdened than their renting peers.

Maintenance costs do, of course, come up. Yet there is arguably more predictability in the upkeep of a home than in the volatility of the rental market, especially in a booming city where displacement is a concern.

Certainly there are households whose incomes are too small or too uncertain to make monthly mortgage payments. But when that is the case, those households are also unlikely to be able to make monthly rental payments. These families aren’t just unable to afford homeownership—they’re likely unable to afford unsubsidized housing. This is undoubtedly a huge problem for our city and our country, but it’s not a compelling argument against homeownership in general.

Homeownership promotes racial justice

Federally-backed homeownership was instrumental in creating the American middle class. But Black and Latino families were locked out of those opportunities, which is a major contributor to America's current wealth disparities. On average, Latinos and Blacks own six and seven times less wealth ($98,000 and $85,000) than Whites ($656,000).

Black and Latino families continue to face more obstacles and risk in buying homes, even with income levels held equal. In the lead up to the 2008 housing market crash, they were more likely to be targeted with predatory loans, and therefore at greater risk for default. And because of the markets they find themselves in, people of color buy homes that are worth less money and gain value more slowly.

But even with these things being the case, a recent review found that equalizing racial homeownership rates alone would erase almost a third of the racial wealth gap. Even with market conditions staying the same, homeownership moves us closer to racial wealth equality.

And predatory practices shouldn’t stop minority communities from pursuing homeownership. New federal protections like the Dodd-Frank Act, which helps prevent predatory lending, need to be enforced and expanded, while localities need to work to make sure reputable lending is available to everyone.

The financial picture is clear: Even when looking at the communities that face the most systematic challenges, homeownership still stands as an excellent way for low-income wealth building. It protects against rent increases, and puts limited money to double duty both providing a home and building equity.

Jonathan Nisly works as an affordable housing advocate for MANNA, Inc. You’re likely to run into him if you’re eating in Mt. Pleasant, hiking around Rock Creek Park, or changing out of biking clothes in a DC council bathroom.