Do alternative forms of homeownership, such as shared equity models and rent-to-own programs, present viable alternatives for future homeownership? Can they be taken to scale in a way that can encourage stabilization of neighborhoods and housing markets?
View the full forum here. Adjustment is part of life. We adjust our education goals, our career plans, our relationship with family and friends and our lifestyle. Sometimes these adjustments are less of a voluntary nature and are made more out of necessity. That necessity is sometimes based on economic standing.
So too it is with homeownership. Our ideas on how to achieve it may need to be adjusted as income levels stagnate. With the homeownership rate continuing to fall, it is clear that single family neighborhoods across America require an attitudinal change by all involved. These neighborhoods and their existing homeowners value stability. Evictions, foreclosures, and empty houses that are slow to sell destroy that stability.
Allowing a young family to live in an established neighborhood as renters while they build the equity and income level that allows for ownership is a win for all involved. It allows the family to become a part of the community, the neighborhood has a resident that is responsible for the appearance of the property and the lender is gradually turning the renter into an owner.
Shared appreciation is another vehicle that offers promise. The lender can offer a lower fixed interest rate because a portion of the property’s future appreciation will accrue to the lender. The homeowner is able to obtain homeownership sooner and at a more affordable monthly payment in exchange for sacrificing a portion of future equity gains.
These alternative forms of homeownership will obviously work better in a stable housing market. And that stability in the market will allow these alternatives to grow in scale. However, the mere fact that they are available can help move the housing market towards normalcy while keeping neighborhoods stable as an attractive place to live.
Kevin Igoe is the owner of IGOE/Associates and serves as a legislative consultant to the Bipartisan Policy Center.
Welcome to the BPC Housing Commission expert forum! This forum is intended to foster interactive and substantive discussion about pressing housing issues. Each month contributors from different parts of the housing sector will be invited to respond to a discussion topic. Guest posts will feature prominently on BPC’s website, as well as be shared regularly with Housing Commissioners to help inform their work. Have a pressing question you’d like us to consider? Please leave it in the comments section. We encourage you and our expert bloggers to add comments, contributing to the national dialogue on solutions for the future of the housing sector. Expert bloggers are not members of the BPC Housing Commission. Any views expressed on this forum do not necessarily represent the views of the Housing Commission, its Co-Chairs, or the Bipartisan Policy Center.