Is shared equity relevant in weak markets?

It is certainly true that rapidly rising housing prices led many communities to establish shared equity homeownership programs. But with the recent market decline, interest in shared equity homeownership has continued to grow.  We have seen the lasting negative results of the ongoing cycle of boom and bust in housing markets.  With lower prices, we have a rare opportunity to purchase homes at affordable prices and preserve them before the next boom.  Shared equity can be used as a tool to stabilize declining neighborhoods and can provide homeowners with real protection against falling prices.

If we didn’t expect home prices to ever recover, resale price restrictions would be unnecessary – housing would remain affordable naturally – but homeownership programs that offered an ongoing partnership with homeowners to ensure occupancy and adequate maintenance and to prevent preditory lending and protect against foreclosures would, nonetheless, help stabolize neighborhoods.  But, more realistically, we do expect housing markets to recover in most places.  Even in communities that didn’t experience rapid housing price increases in the past decade, the threat of rising prices remains real.  Many weak market cities have central neighborhoods that have been experiencing increased housing demand due to their proximity to transit.  Where we are directing significant public investiment to revitalize transit friendly neighborhoods, we are likely to create future housing affordability challenges which can be addressed with shared equity homeownership.

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