Asset Building

Imagine a lower income household that wants to buy a home and can qualify for a $125,000  30-year fixed rate mortgage.  If starter homes in their area generally cost more than $200,000, this family would be forced to choose between borrowing more than they could safely afford or remaining in rental housing. If, instead, they partnered with a local shared equity program, the family would take out a $125,000 mortgage and the program would invest the remaining $75,000.  In exchange for this assistance, the family would agree to later resell the home at an affordable price to another lower income buyer.  The family would have a home of their own with stable affordable payments.  They would build equity each month as they paid off their mortgage.  In addition they would be able to realize limited price appreciation as the affordable price increased over the years. And were the market to decline, the program would share in the loss, helping to protect the family’s equity.

Hundreds of thousands of families across America have decided that this kind of shared equity arrangement makes sense for them.  For many low-income households in higher cost housing markets, it offers the only realistic avenue to homeownership.  For others, even in slower growth markets, shared equity homeownership offers a safe way to build equity and save for traditional ownership. A study of shared equity homes in Burlington, Vermont found that 70% of sellers were able to move into traditional homeownership thanks, in part, to the equity that they realized when they sold their shared equity homes.

Learn More

  • Preservation of Affordable Homeownership: A Continuum of Strategies
  • This report, one of several related resources published by the Center for Housing Policy, provides an overview of the strategies available to help communities preserve affordability of assisted homeownership units and explains the pros and cons of different approaches.  The report describes grants, forgivable loans, deferred loans, shared appreciation loans, deed restrictions/covenants, community land trusts […]

  • Survey: Community land trusts lower risk of losing homes to foreclosure
  • Homeowners in community land trusts (CLTs) across the country are much less likely to lose their homes to foreclosure than owners of market-rate homes, according to survey results released by the National CLT Network and the Lincoln Institute of Land Policy. The new data show 2008 closing with a slight 0.52 percent foreclosure rate among […]

  • Asset Building Impact of a Limited Equity Housing Cooperative
  • This brief report by David Thompson quantifies the economic benefits and other outcomes for residents of the Dos Pinos limited equity housing cooperative in Davis, CA during the period between 1985 and 2005.  The report estimates the annual housing cost savings relative to renting and market rate homeownership, the return on an owner’s invested capital, […]

  • Burlington Resale Study
  • picture-51This 2004 study of the first 100 home resales conducted by the Burlington Community Land Trust (now known as the Champlain Housing Trust) is the only formal study of program outcomes for shared equity homeownership completed to date. The study documents significant asset building outcomes for homeowners as well as success in preservation of affordability for future buyers.

  • Boston Globe: A Foreclosure Free Option
  • THE MORTGAGE CRISIS and the rise in foreclosures nationwide have left the American dream in tatters and may be sparking a recession. Yet a fast-growing form of housing - the community land trust - has become a virtually foreclosure-free safe harbor. One of the best examples of this fresh approach to putting a roof over people's heads is in Boston.

  • Measuring the Market for Shared Equity
  • Picture 9This 2007 report by Robert Charles Lesser and Company provides quantitative estimates of the total consumer demand for shared equity homeownership in the 20 largest US metropolitan areas based on a survey of 1,100 low or moderate income renters with an interest in purchasing a home.

  • Homeownership 2.0
  • Picture 10 This report by the Asset Policy Initiative of California outlines a blueprint for building responsible pathways to homeownership for low and moderate income homeowners. The report highlights shared equity homeownership as one element in a more comprehensive strategy to ensure that lower income households have meaningful asset building opportunities.