Leo T. Gabriel - Professor of Business, Bethel University
Richard M. Todd - Vice President, Community Development
Published March 31, 2010
We examine the cost and operational methods of three homeownership programs offered by the Minnesota Home Ownership Center (Center) and its partner agencies: Home Stretch homeownership classes, pre-purchase home buyer counseling, and foreclosure counseling. We describe the general cost structure of each program, identify factors associated with high or low costs, and summarize the agencies’ views on some of the resources they use. We find that, across the Center’s network over a three-year period, the per-unit cost of homeownership service provision showed no systematic tendency to rise or fall with the volume of service provision (appropriately measured). This suggests that the Center’s network of partner agencies may have, collectively, already achieved significant economies of scale. A survey of partner agencies also suggests technical assistance and technology, provided by the Center, have been helpful in achieving this result. However, costs per household at some agencies deviated from the general patterns in ways that our data did not fully explain. This variability prompts us to recommend the use of target cost measures and cost reporting to identify efficiencies and best practices that could make the Center’s programs more efficient and, thus, more sustainable.
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