Water doesn't rise in a leaky bucket

A developer's perspective on increasing equity, access & affordability in homeownership

From a presentation I gave at Hudson Valley Pattern for Progress Progress’ Annual Housing Forum with their Center for Housing Solutions and Community Initiatives in Poughkeepsie, NY (September 13, 2023)

There are a lot of us out here trying to build more affordable housing. Our housing crisis isn’t only a housing supply crisis, and we can’t just build our way out of it, but the lack of adequate housing supply is still a key issue.

When it comes to affordable homeownership in particular, supply is one of our biggest challenges. There are simply not enough quality, affordable homes available for low- to moderate-income families to purchase. Whereas homeownership used to be available to regular families, it’s quickly become out of reach for all but the wealthiest, depending on what market you’re in. And because homeownership builds wealth through exclusion, what’s good for current homeowners (high property values) is bad for the next generation of buyers.

The homeownership problem

Last year, I gave a presentation from a developer’s perspective on how we can increase equity, access and affordability in homeownership.¹ In it, I argued that we need to reconfigure the rights and responsibilities to make homeownership more equitable, accessible and community-focused.

Source: Habitat for Humanity’s Shelter Report: Affordable for Good

For developers like Habitat, our challenge isn’t only to meet the housing demands of today, but to figure out how to lay an equitable foundation for the future. Without preserving the affordability of the homes we build, we’ll just continue to pump money into a project only to see all of that subsidy and hard work disappear from the community once the house is sold. We never make enough progress, because today’s affordable units become out of reach for the next buyer.

One way to do fix that? Through a shared equity model like a community land trust.

In a shared equity model, a one-time subsidy is invested to make a home affordable to a lower-income household. In exchange for purchasing the house at the subsidized sales price, the owner agrees to restrict how much they will sell the home for in the future so that it is permanently affordable for future generations of buyers.

A community land trust (CLT) takes shared equity one step further. Not only is the appreciated equity of a home shared, but the actual ownership of the property is shared as well. CLTs are nonprofit organizations that are governed by CLT residents along with neighbors and community representatives. The CLT owns the land, and then the household owns the house.² I know, it sounds weird but it’s actually how a lot of commercial properties operate! Our attorney tells me that he always thinks of Friendly’s restaurants, because Friendly’s owned the buildings but leased the land. A land trust for Cone Heads™.

With permanent affordability, homes can become not just an individual wealth-building asset but also a collective community asset, ensuring that the investments being made truly belong to the neighborhood and the residents that live there. Homeowners still build wealth and the community retains its affordability. Public subsidies, which are finite and always under threat, are preserved in the home and paid forward to future buyers. Same amount of money, but more households served.

Win win win.

You can read about the first homes that Habitat for Humanity Capital District developed in partnership with the Albany Community Land Trust here. We’ve completed six CLT homes to date and we have six more under construction.

I adore this call to action that I excerpted, again, from Habitat for Humanity’s Shelter Report: Affordable for Good.

There’s more to talk about though — how CLTs take property out of the speculative housing market and put them back into community control, how they can combat the negative impacts of gentrification, how they started as a way to prevent the displacement of Black sharecroppers in the South, and how they make homeownership more sustainable for families.

Prosperity, wealth & the American dream

Plus, I’ve been noodling around an idea about how to use the CLT model to buy up market-rate houses to expand the affordable inventory in exchange for the current getting some present-day benefits… I don’t know, more to figure out but I think there’s some merit there. Thoughts?

1. I’ve included select slides from the presentation here, with much of the content informed by Habitat for Humanity’s 2017 Shelter Report: Affordable for Good.

2. The absolute best resource for understanding shared equity and community land trusts is Grounded Solutions network.