The Local Solutions in Action series highlights strategies for expanding housing options and increasing housing affordability. The focus is on land use, zoning, financial and other regulatory tools that are available to cities, counties and towns that can be used to meet the housing needs of their residents and workforce.
Shared Equity Homeownership
Shared equity homeownership refers to an array of programs designed to promote long-term, affordable homeownership opportunities. These programs generally involve a combination of municipal and/or non-profit subsidy and restrictions on the sale and resale of homes. Shared equity programs fill the gap between what lower-income households are able to afford to pay for a mortgage and the actual mortgage cost to own a property. In addition, these programs explicitly are designed to ensure that homes remain affordable over the long-term, allowing for multiple families to benefit from access to affordable homeownership.
There are many different ways shared equity housing programs are structured. Among the multiple shared equity models include shared-equity cooperatives, limited-equity resident-owned communities, community land trusts and deed-restricted/below market-rate programs (e.g. inclusionary zoning models).
The Urban Institute has evaluated the impacts and benefits of share equity homeownership, finding that these programs are effective both at promoting homeownership among low- and moderate-income households and creating wealth in the form of housing equity.
According to the Grounded Solutions Network, hundreds of thousands of families in the U.S. have benefited from shared equity homeownership (including me).
The Champlain Housing Trust (CHT), based in Burlington, Vermont, is the nation’s largest community land trust, founded in 1984 by the merger of the Burlington Community Land Trust and Lake Champlain Development Corporation. Through its shared equity homeownership program, the CHT makes homes available for purchase to lower-income households through a ground lease whereby the CHT retains ownership of the land. This structure allows the home sales price to be affordable to purchasers with lower incomes. The other mechanisms that allow for lower-cost homeownership opportunities and permanent affordability include downpayment assistance (through state and federal sources) and limits on the appreciation that accrues to the owner (the remainder stays with the home to keep in affordable to the next buyer.) There are more than 700 shared equity homes supported through the CHT.