Many real estate professionals struggle with how to help potential homebuyers who simply cannot reasonably afford an entry level home but nonetheless have a strong desire to own a home of their own. Shared equity programs offer these families a stepping stone to traditional homeownership by allowing them to purchase at an affordable, below market price and begin building predictable wealth through homeownership. For buyers who are otherwise priced out of the market, shared equity homeownership offers most of the benefits of traditional homeownership including security, stable housing costs, control over their own place and potential tax advantages.
And, while shared equity homeownership programs limit the amount of home equity these buyers will likely realize in order to offer an affordable purchase price to the next buyer, this form of ownership can still be a great investment. The limited but predictable wealth building that owners experience in these programs generally excees the financial returns available from other common investment types. One recent study showed that shared equity homeowners were earning an average of 17% annual return on their initial investment.
- Survey: Community land trusts lower risk of losing homes to foreclosure
- Commercial Mortgage Insight: Shared Equity Gains Acceptance
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 […]
This article from Commercial Mortgage Insight explains how mortgage brokers and lenders can participate in the growing trend toward shared equity homeownership. The greatest benefit of shared-equity ownership is that it presents the opportunity to both generate substantial wealth for individuals and allow communities to create a stock of permanently affordable ownership housing. Historically, the only housing options available have been renting or traditional homeownership, where the buyer reaps all the rewards of ownership, but also bears all of the burdens. More often than not, those burdens are too great for low- to moderate-income individuals.
- Boston Globe: A Foreclosure Free Option
- National Association of Realtors: On Common Ground
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.
This article comes from the Winter 2008 issue of On Common Ground, a publication of the National Association of Realtors focused on smart growth issues. The article describes "a growing trend toward shared equity housing, a trend that, in the past few years, has taken on the momentum of a bullet train." The article profiles several shared equity homeownership projects including the Beecher Cooperative in Washington DC and Southern Lights a " a deed restricted housing project initiated by the Boulder Area REALTOR® Association."