SHARED EQUITY HOMEOWNERSHIP IN THE AFFORDABLE HOUSING CONTINUUM STABILITY – EQUITY – ECONOMIC GROWTH Northwest Community Land Trust Coalition CONTENTS Northwest residents impacted by rising housing costs . 2 Building a region everyone can afford . 3 Shared equity homeownership: the community land trust model . 4 A bridge to traditional homeownership . 5 Affordable homeownership plays a key role in the housing continuum . 6 Stability and economic growth for families and communities . 7 Homeowner stories . 9 NORTHWEST RESIDENTS IMPACTED BY RISING HOUSING COSTS Advocates Urge Oregon to Act to Ease Housing Crisis Public News Service April 11, 2017 Long wait lists for affordable housing in IF Can Olympia Solve Seattle’s Housing Crisis? Post Register Caroline Halter, Washington March 23, 2017 State Wire, February 19, 2016 Housing Crisis Mayors Cry Out for Affordable “Ugly And Getting Uglier” Housing in County Matt Rosenberg, Lens, Gary Bégin, Lake Chelan Mirror June 6, 2016 September 7, 2016 The Hidden Reason Report Looks at Lack of Affordable Housing Behind Seattle’s Patty Hastings, The Columbian, June 2, 2016 Skyrocketing Housing Costs Kathleen Richards, Affordable Housing Leaders ‘Fired Up’ The Stranger, Over Economic Crisis July 29, 2015 Flathead Beacon May 28, 2016 page 1 page 2 BUILDING A REGION SHARED EQUITY HOMEOWNERSHIP: EVERYONE CAN AFFORD THE COMMUNITY LAND TRUST MODEL Homeownership Benefits People, Homeownership organizations often Shared equity through a community land In shared equity homeownership, Jobs and Economic Growth have significant waiting lists and a 1:10 trust is a model of affordable homeownership homeowners are an essential part of A safe place to live is an essential start . ratio of homes to qualified applicants . that allows income-eligible families to perpetuating affordability . They build Yet, housing can be more than a home . purchase homes at below-market rates . It’s a assets through principal reduction and Smart public investments in homeownership Those unable to stabize their housing proven stepping stone on the way to market- sharing in the accrued equity of the home . for low- to moderate-income people costs with affordable mortgage payments rate home ownership for low- to moderate- No homeowner is required to sell their can be part of the long-term solution to are often cost-burdened or forced to income people . (Source: Capital Impact) home, even if their income increases . But breaking the cycle of rental dependence . relocate . Those who continue renting if they decide to sell the price is based on Access to affordable homeownership move frequently as rents increase, losing We put homeownership within reach by a formula . This “pay it forward” method can expand the middle-class . neighborhood ties and often moving reducing the cost to the buyer two ways . means that the home stays affordable children from school to school . First, the cost of the land is removed from to the next income qualified buyer . Demand Outstrips Supply the home purchase, reducing the price by The inventory of “naturally affordable” 30% to 50% . Buyers purchase only the As a result, affordability is perpetuated homes in both rural and urban areas home itself with a traditional mortgage . at each address, stemming the tide of is outstripped by the demand . displacement of modest-income members Second, as non-profit developers of homes, of our community who have the opportunity community land trusts build or rehab homes to build wealth, and to thrive in place . specifically for low- to moderate-income people and take only as much fee as is needed to cover their operating costs . Shared equity homeownership through community land trusts is helping to build a region everyone can afford. The Northwest is home to 19 community land trusts in 15 counties, stewarding over 700 homes for modest income families. x7 The one-time community investment in a shared equity home doesn’t serve just one family. That investment lives at the same address in perpetuity, becoming Northwestern states 2005 2016 more valuable over time. Assuming families move on average every 7 years, one Falling Behind community land trust home will give up to 7 families over a period of 50 years the 71.6% 72 chance at the American Dream of homeownership. Rates of homeownership 67.3% in Washington, Oregon, 68.9% 66 Montana and Alaska were 64.4% 64.4% 6% lower than the national 60 average in 2005 . After Families invest in the home. % RESIDENTS WHO OWN HOMES recovery from the recession, WASHINGTON VS. THE NATIONAL AVERAGE homeownership rates still lag the national average by 6 .5% . (Source Census.gov 2017) The community invests in the land. page 3 page 4 A BRIDGE TO TRADITIONAL AFFORDABLE HOMEOWNERSHIP PLAYS HOMEOWNERSHIP A KEY ROLE IN THE HOUSING CONTINUUM Community land trust Northwest taxpayers support homeownership puts the “housing continuum”— a homeownership within reach of progression of resources that modest-income families . Public include emergency housing, and private investments help transitional and permanent reduce the cost of a home by supportive housing, subsidized 30% to 50% . Homeowners own rental and homeownership for the home as long as they wish, modest-income people . Each but when they sell they agree form of housing plays a critical to do so at an affordable price role in serving those most in need . to the next modest-income Increasing access to affordable family . Each homeowner homeownership is a strategy builds equity and each home that helps the whole continuum . remains affordable to the next It creates an opportunity for buyer—a community asset that people to move up and out of prevents further displacement . subsidized rental . Community land trust homeownership is a vital step between renting and market-rate homeownership . A holistic, systems view of housing recognizes that increasing access to affordable homeownership is a strategy that helps the whole continuum. FOR FOR FOR RENT SALE SALE The Housing Alliance values affordable • Expanding affordable homeownership homeownership and believes the state opportunities can help reduce the “ wealth gap between people of has an important role in expanding and preserving homeownership for color and white people, created by Renting The Bridge Community Land Trust Traditional redlining, predatory lending, and Individuals and Public and private Homeownership Homeownership low-income households because: other forms of racial discrimination; families who are investments in Families who own their Over time the family’s • Owning a home helps low-income • Homeownership plays an especially priced out of traditional community land own home put down roots, growing equity can allow families build assets that can important role in rural communities, homes can qualify to them to enter the traditional trust homes put build equity safely and provide stability for the future; where housing costs are lower, and own a community land homeownership within receive all the other social, home-buying market or • Permanently affordable; less land is zoned for multi-family trust home. reach of modest income health and financial benefits fund another dream such homeownership can help prevent development, making support for families by closing the of ownership. as education. displacement resulting from homeownership an important part provides: stability, gap between what gentrification as communities grow; of addressing rural housing needs . safety homes cost and what provides: permanence, provides: permanence, people can afford. safety, equity safety, equity, possibilities — The Washington Low Income Housing Alliance’s ” Statement in Support of Homeownership page 5 page 6 STABILITY AND ECONOMIC GROWTH FOR FAMILIES AND COMMUNITIES Homeownership opportunities Community land trust • Community land trust homeownership created for low- to moderate- homeownership creates prevents income displacement income families provides a variety of in rapidly gentrifying areas benefits – from economic to social. stability in transient • Community land trust homeownership • Stabilization – Homeowners are no neighborhoods and creates stability in otherwise transient longer subject to rental displacement . communities resulting in deeper neighborhoods and communities resulting in deeper investment • Predictable Housing Costs – Through investment and lower crime. (financial and social) and lower crime 30-year fixed-rate mortgage payments homeowners have a predictable • Community land trust homeownership housing payment that allows them Shared Equity Homeownership is an provides work-force housing to save and plan for the future . Investment in Our Communities that brings employees closer to places of employment which in • Build Household Equity Safely – Our Homeownership opportunities turn enhances productivity homeowners are 10 times less likely created through community land to experience foreclosure due to trusts are an investment that benefits • Preserves the affordability ongoing homeowner support . homeowners and communities . of the home at resale to Community land trust • Social Benefits – The list of social income-qualified buyers • Puts homeownership within benefits associated specifically • Community land trust homeownership homeownership is a stepping reach of low to moderate income with homeownership (versus creates a balance between the households who purchase their first stone to market-rate stable rental housing) include: public’s investment and the home at a price they can afford homeownership and, as a buyer’s