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.

Among the report’s findings:

  • Over the next five years, demand for permanently affordable shared equity housing emanating from the 20 largest MSAs alone could total approximately 297,455 units.
  • On average, 14.8% of the target market audience for shared equity housing would be strongly inclined to purchase a home using shared equity.
  • When faced with the financial implications of a hypothetical shared equity purchase—including down payments, sales price and cash-out when the homeowner sold, purchase price, and monthly payments—a large majority of respondents indicated a willingness to trade away equity in exchange for more favorable purchase terms.
  • When offered a variety of differing financial implications for a home purchase, including down payments, monthly payments, and equity cash-out at time of sale, only approximately 20% of respondents ultimately preferred the scenario without shared equity.
  • The survey revealed that the “education gap” with regard to shared equity housing is a significant barrier to its acceptance, and that bridging this education gap could have a significant impact on acceptance and demand for shared equity housing.
  • After receiving a tutorial on the concept and potential workings of shared equity housing, 70.8% of those surveyed were somewhat (56%) or very (14.8%) interested in purchasing a home under a shared equity scenario, as compared with only 3.5% before the tutorial

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Download: Measuring the Market for Shared Equity