It’s All About Choice

Rather than just developing homes for sale, City of Lakes CLT lets buyers pick houses to bring into the land trust.

Results

To date, 50 homes have been added to the CLCLT through HIP. Approximately $2.5 million has been invested in affordability and another $1.5 million in rehabilitation of those homes. This investment includes almost $500,000 from some of Minneapolis’s 81 neighborhoods, which chose to allocate a portion of their Neighborhood Revitalization Program (a program unique to Minneapolis) funds designated for affordable housing to HIP.

Because of some of HIP’s different structures, the CLCLT has served households that are not often, if ever, served by other affordable homeownership programs. For example, 49 percent of HIP homeowners are people of color. Comparatively, in the city of Minneapolis, only 15 percent of households of color own a home even though they represent 35 percent of the city’s population. Additionally, 96 percent of HIP buyers are first-time homebuyers; 76 percent of HIP homeowners are single female heads of household; and the average household income is 44 percent AMI.

As one HIP homeowner stated, it has “created another level of assistance . . . for low-middle income families like us who don’t have the ability to really save for down payments and don’t have the extra money for higher mortgage payments. For those of us who consistently fall through the cracks and seem invisible to policy makers, this kind of help can make a big difference in our quality of life.”

Roles in Different Markets

When HIP started, home prices were appreciating rapidly in Minneapolis, as they were around the country, and HIP was able to help buyers at various income levels secure affordable homeownership and create long-term affordable housing units. As the housing market changed and communities were decimated by the foreclosure crisis, another distinct advantage of HIP was revealed.

In the last two years, through HIP, the CLCLT has helped a number of buyers who have only been able to qualify for mortgage amounts in the $40,000 to $60,000 range. With the addition of the CLCLT affordability investment and the depressed market circumstances, these HIP buyers have been able to find quality housing stock at truly affordable prices and be confident that it will not become a home maintenance boondoggle. This population of buyers could not have considered purchasing a home at all three (and definitely not four) years ago.

HIP’s approach also has a less visible advantage over a “purchase, rehab, and then sell” model. While a multitude of investments are being made in our communities to recapture and rehab foreclosed and vacant homes, many remain unoccupied post-rehab as developers struggle to find qualified buyers. While often a first step, unoccupied rehabbed homes do not really stabilize a community.

HIP reverses this process by starting with an income-qualified buyer seeking the home they want to purchase, in a community of their choice. Rehab occurs after the home is occupied, and the CLT requires that the buyer occupy the home for the duration of ownership. When given an opportunity to choose, buyers are more likely to identify a community to which they are already connected or have an interest in being connected to. Of the 18 HIP buyers who have purchased since 2009, 11 have chosen homes within two miles of their previous residence. Having such choice promotes a stronger sense of ownership and further cultivates commitment to a community where a buyer/homeowner already has a vested interest. Homebuyers willing and wanting to be invested in specific communities and open to purchasing foreclosed, vacant houses are an integral component to fully restoring our neighborhoods.

HIP is also adaptable, within its mission, for example, allowing neighborhoods to be stabilized by keeping people in existing homes. Of the HIP buyers who purchased within two miles of their home, two purchased the homes they were already living in: one rental home that was for sale and one home inherited with significant liens and headed toward foreclosure. These circumstances required adaptability but not dismissal of the HIP’s guidelines.

Community land trust homeownership is one element on the continuum of affordable housing options. HIP adds a layer to this element in a manner that offers a greater degree of individual choice than is often seen with other options. Having a choice from the start empowers buyers to create a sense of place that will hopefully serve them well in all aspects of their life and create a foundation from which they can continue to progress.

Recently, one of the CLCLT’s first HIP buyers shared, “During all the ups and downs I have had over the past few years, one thing that never changes is my home. It is my pride. I love my neighborhood. I love my yard. When things are bad my warm little house gives me comfort and when things are good it is a hub for friends and laughter and memories.”

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