Beginning with this issue, NHI will be reporting on our current research interests. In the Fall of 2004, we began a two-phased, multi-year study on shared-equity homeownership, which encompasses various models of resale-restricted, owner-occupied housing in which affordability is contractually maintained for a number of years. Leading this research project is John Emmeus Davis of Burlington Associates in Vermont. For more information on NHI research activities, see www.nhi.org/policy.
Our research on shared-equity housing focuses on three models: deed-restricted houses and condominiums, community land trusts, and limited-equity cooperatives. The initial phase of the study documents organizational and programmatic variations, identifies policies at the nonfederal level that support (or impede) the development of shared-equity housing, and examines what supporters say are its many benefits.
The claims that are made for these alternative models of homeownership provide both a rationale for supporting them and a yardstick for evaluating them. In our research, we have discerned at least 10 such claims for their effectiveness, appearing in the literature and pronouncements of the housing activists who are promoting these models, the private lenders who are financing them and the public officials who are using them to extend the affordability of housing created with public dollars or public powers.
1. Expanding access to homeownership
Shared-equity housing helps low- and moderate-income people become homeowners, especially in communities where market-rate homeownership is elusive, not only for the poor, but also for those who earn modest wages such as school teachers, nurses and police officers.
2. Preserving access to homeownership
Shared-equity housing is a way to maintain affordability for many years. Especially in communities where the investment of public dollars has expanded homeownership for persons excluded from the market, these models can ensure that the next generation of low-income homebuyers will have access to the same opportunities available to the present generation.
3. Enhancing security of tenure
Shared-equity housing helps first-time homeowners succeed. In most of these models, there are shared responsibilities, pooled risks and a willingness to intervene in times of trouble. Such security enhancements “backstop” the homeownership opportunities that a public agency or private sponsor may have worked so hard and spent so much to create.
4. Stabilizing residential neighborhoods
Shared-equity housing stabilizes property values, protects homeownership gains and prevents the displacement of lower-income households in neighborhoods experiencing gentrification. Especially in neighborhoods where governmental action has instigated such change, these models can protect some residential properties from the negative effects of public investment and the disruptive fluctuations of private investment.
5. Building personal assets
Shared-equity housing helps build assets for lower-income homeowners. Despite the limit that is placed on an owner’s proceeds when a shared-equity home is resold, these models provide an opportunity (although not a guarantee) for homeowners to walk away with more money than they had before buying into this housing.
6. Protecting public assets
Shared-equity housing can prevent the privatization and removal of public subsidies by ensuring that precious public resources – donations of public land or investments of public dollars – are preserved for the continuing benefit of a larger community.
7. Creating social capital
Shared-equity housing nurtures social networks and mutual interests among the residents of publicly-assisted housing. Especially in projects where crime and deferred maintenance have created an undesirable place to live, these models can improve such conditions by fostering collective responsibility and action.
8. Expanding civic engagement
Shared-equity housing can expand the participation of local residents, not only in the operation of their own housing, but in the activities of block clubs, watch groups and other civic associations in the surrounding neighborhood.
9. Enabling personal mobility
Shared-equity housing may help lower-income households to improve their lives. These models not only offer a way to put more money into the pockets of the poor, but they also give individuals the stability and confidence to seek out better jobs, to step up to better housing or to move out to a better neighborhood.
10. Promoting development and diversity
Finally, these models may be a means of improving neighborhoods where the poor are concentrated or diversifying neighborhoods where the poor are excluded. Shared-equity housing, in the first instance, becomes one component of a comprehensive strategy for community development. In the second, it becomes one component of a regional “fair share” strategy, a tool for opening up suburban enclaves to people with lower incomes or darker skins than a majority of the homeowners who have historically lived there.
Does the actual performance of deed-restricted housing, CLT housing, and co-op housing measure up to these claims? Does shared-equity homeownership do what it promises to do? During this first phase of the study, we have found considerable support for several of these claims. For the rest, the evidence is sketchy at best – or nonexistent. We will address some of these research gaps in the next phase of our study of shared-equity housing as we conduct a more extensive analysis of the successes (and failures) of these alternative models of tenure.