The American Dream of mortgage-based homeownership has taken a hit in the aftermath of the housing meltdown, but housing advocates say homeownership is still important to building strong communities - so long as buyers don't view their home as a cash-cow.

During the housing boom, that perception - and the belief that home prices would increase indefinitely - led people to buy homes they couldn't afford, advocates say.

"People were seeing homes as a piggy bank to extract short-term gains," said Michael McDonald, executive director of the nonprofit Habitat for Humanity Tucson. "We need to look at rebalancing our perception of homeownership, that it's not just an ATM. It has other socioeconomic benefits that benefit not only households, but neighborhoods and community - the benefits of rootedness."

Home prices in Arizona are beginning to rebound, which experts say is a double-edged sword: Rising home prices can signify recovery, or a burgeoning housing bubble that will price more people out of the market.

Home prices in Pima County are up 11 percent and prices in Phoenix - 23 percent compared with last year, says real estate data provider CoreLogic. Prices in Pima County and Phoenix are still down 38 percent and 42 percent, respectively, since 2006.

"Already there's a new exuberance in Phoenix, and coming to Tucson, about the increase in prices," says Brent White, professor at the University of Arizona's College of Law and author of the 2010 book "Underwater Home."

"That's a bad thing, in my view - prices going up so quickly and beginning again the cycle of irrational exuberance, driven by profit-seeking," he says.

Advocates promoting homeownership locally say they face competition from investors who are easily outbidding low- to moderate-income prospective borrowers and buying up the relatively low-priced, foreclosed homes and using them as rental properties.

The issue is not unique to Tucson. The National Association of Hispanic Real Estate Professionals found that last year, more than 90 percent of Phoenix foreclosed homes were sold to investors, even though agents reported having 10 qualified buyers for each home listed.


In the City of South Tucson - where 79 percent of residents are Hispanic and 11 percent are American Indian - the Primavera Foundation is working to bolster homeownership rates, says Peggy Hutchison, the nonprofit's CEO.

Primavera's City of South Tucson Revitalization Project has built or rehabbed 26 new homes in the city and done major improvements on 14 owner-occupied homes there, Hutchison said.

Nearly half of South Tucson residents live in poverty, and less than one-third own their home.

Despite severe economic stress in the city, South Tucson residents are remarkably stable: Almost half of South Tucson residents have lived there for more than 10 years. Twenty percent have lived there more than 30 years.

But almost three-quarters of South Tucson residents surveyed aren't satisfied with housing affordability. Two-thirds of them pay more than 35 percent of their income on housing, more than the recommended 30 percent.


Pima County Community Land Trust also is working to to promote homeownership and stabilize neighborhoods.

Using federal Neighborhood Stabilization Funds, the community land trust acquired, rehabbed and renovated 78 aging housing structures throughout the city. The group has sold 69 of them so far at discounted rates to qualified low- and moderate-income homebuyers earning between 50 and 80 percent of area median income. (Twenty-five homes will remain rental properties.)

Through a 99-year, inheritable ground lease, buyers get a reduced mortgage at no more than 80 percent of the home's appraised value. The homeowner must pay a monthly fee of about $75 for leasing the land, which remains held in trust by the Pima County Community Land Trust.

The catch is, the house can only be sold again to another qualified low-income buyer.

"We're actually creating a permanent inventory of homes that will always be affordable," says Maggie Tellez, land trust executive director.

Contact Emily Bregel at 807-7774 or On Twitter: @EmilyBregel