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?
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NeighborWorks believes that community stabilization requires a comprehensive approach to housing opportunities, which employs strategies that support traditional and nontraditional forms of homeownership, as well as rental options. This approach includes providing affordable inventory and low-cost accessible mortgage financing.
A number of NeighborWorks organizations have had success with shared equity and lease-to-own models. For instance, Durham Community Land Trustees and Champlain Housing Trust in Vermont have effectively used the land trust model to build homeownership opportunities for lower income families. Beyond Housing in St. Louis, Missouri has had success with its lease-to-own program.
There are new opportunities for scaling up nontraditional homeownership approaches that face challenges, but are worth exploring. Sometimes these strategies are resource intensive, so it is important to develop the organizational and external (legal, financing) infrastructure necessary for success. Local market conditions can also dictate what resources are needed to achieve success. For instance, one of the best places to use shared equity is a community with an inclusionary housing requirement, as is currently happening in an Austin, Texas program run by Habitat for Humanity. In those communities, little or no additional capital is needed to undertake the model.
In closing, we believe the best way to further community stabilization is through multiple strategies, which support many different forms of homeownership, as well as rental housing. All of those elements of a successful approach require flexible resources that can sustain plans tailored to the needs and resources available in each community.