Opinion: Building wealth should be within reach
Published: 10-05-2024 8:00 AM |
Loren Selig is a state representative for Strafford 10, Durham.
Buying a home is just not like it used to be. Take it from me, a former realtor and a current state legislator. Right now, good homes sell quickly, and prices are high. Last month, the median sales price of a home in New Hampshire was over half a million dollars!
While our parents and our parent’s parents were able to afford and buy a home in their twenties, that same reality is just not accessible to young Granite Staters, where only 9 percent of homeowners in New Hampshire are under the age of 35. This has forced young Granite Staters into renting at high costs with little extra money to even begin to save for a future down payment and no ability to build their credit with on-time rent payments.
But, don’t take it from me, look at the data. A report released last week by the New Hampshire Fiscal Policy Institute found that in 2023 renters in New Hampshire were cost-burdened by housing at higher rates than homeowners were. That means that 51 percent of renters in New Hampshire are paying more than 30 percent of their income in rent, compared to 28 percent of homeowners paying more than 30 percent of their income on mortgage payments.
So, how do we end this vicious cycle that keeps young people struggling in New Hampshire or leaving our state altogether? First, it’s by recognizing there is no one-size-fits-all solution. The changes that need to be made to ensure people in their 20s, 30s, and 40s can experience homeownership in their lifetimes are manifold and include zoning adjustments, lowering costs for developers to build more affordable starter homes, and access to better home loans.
However, a simple issue less discussed is that, even when our housing supply increases, young renters may not have adequate credit to get a good mortgage because they lack the opportunity to build their credit score.
That’s why I filed legislation that would create an opt-in program to allow renters to build their credit through on-time rent payments. This legislation will require larger, professional landlords and property managers of residential properties to offer their tenants the opportunity to report their on-time rent payments to a major credit bureau.
And before anyone yells ‘unfunded mandate,’ never fear that the landlord’s expenses in offering this service will be offset by a small fee of up to $10 to the tenant. For many renters who may not have a car payment or even a credit card, this opportunity will be life-changing to build and increase their credit score.
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It’s common sense, really. Renters are already paying their rent each month, just as homeowners are paying their mortgages, but renters are getting none of the benefits for proving their fiscal responsibility. We know that a good credit score dramatically impacts one’s ability to get a mortgage, get better car and homeowners insurance rates, student loans, personal and business loans, and even an easier time renting another apartment in the future.
When I talk to landlords and property managers, many tell me that they already use software for billing their tenants that could easily be integrated to offer this exact credit service. According to data from one of the software systems called Front Lobby, landlords who report to credit bureaus lowered rental payment delinquencies by 95 percent. Concurrently, tenants that have taken advantage of such a service report over 70 points increase in their credit score — a win-win.
In 2025, House Democrats will lead the charge in implementing this straightforward legislative change. When Granite Staters can significantly enhance their financial well-being and future, the health of our communities and the entire state economy will also prosper. This initiative offers tremendous promise, and we’re committed to enhancing affordability for our young people, their families, and the communities that support them.
Through simple, common-sense changes like this, we can collectively build a vibrant future for all Granite Staters.