Shared Equity Models Create Housing for Hard-Working Americans
How have shared equity housing models created positive impacts on the supply of affordable housing?
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By Jonathan T.M. Reckford
In the words of American writer Guy Finley, “Any burden shared isn’t just half the burden — but a burden made lighter for all who agree to carry it; the unthinkable truth is that if everyone agreed to carry just a little more, everyone would carry a little less.” By sharing both the burdens and benefits with homeowners, shared equity models create housing units for hard-working Americans who lack the income, credit or assets to qualify for conventional mortgages.
Under the most prevalent shared equity housing models, resale prices are restricted to keep pricing affordable for current families and to preserve affordability for future generations. Given the right conditions, shared equity models increase access to homeownership, and thus to opportunity and stability while retaining units of housing that will be affordable to subsequent low-income families. For shared equity models to reach their fullest potential, government at all levels should ensure that regulatory and funding environments support these efforts.
Recognizing the benefits of shared equity, numerous Habitats for Humanity affiliates around the country are collaborating in some way with local community land trusts (CLT) — either forming their own CLT or using a land trust model. Most typically, we see Habitat affiliates gravitate toward shared equity models in higher cost areas, including urban and resort areas. In at least two U.S. cities, a Habitat affiliate has partnered with local government to help launch a CLT to be available for both Habitat and non-Habitat affordable housing units.
Austin Habitat for Humanity, for example, began to incorporate shared equity units into its portfolio five years ago in response to rapidly rising costs in the housing market. Leaders there explain that the affordability and stability provided through a shared equity model can enable families to live in a neighborhood they would not otherwise be able to afford and helps children remain in the same school, rather than relocating with every increase in rent.
As the housing market continues to recover and land prices climb, we are seeing growing interest in the shared equity model from Habitat affiliates throughout the country—including local organizations in California, Florida, Washington and Virginia. Depending on local market conditions, some affiliates use the CLT model exclusively, while others offer it as an option for prospective homeowners.
In Austin, as well as these other areas, Habitat continues to collaborate with local, regional and state officials to ensure that shared equity housing models meet the needs of all parties involved. We encourage policymakers around the country to review current models, standardize what is best for their regions and adopt regulatory and funding policies that encourage the use of shared equity models. As the economy continues its upward climb, it is crucial that communities around the country adopt policies that support and maximize the established benefits of permanently affordable housing. After all, when everyone pitches in, the load is lighter – and the reward is greater.
Jonathan T.M. Reckford is the CEO of Habitat for Humanity
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