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 and several other options.
Cities, counties and states are accustomed to commitments of affordability for up to fifty years or longer when they invest in affordable rental homes. Many programs designed to assist first-time homebuyers, however, have no provisions preventing the assisted family from selling the unit and realizing a windfall the day after the home is purchased. What naturally happens is that as the amount of per-household subsidy rises, programs become more concerned about preserving the value of public subsidies and turn from grants to loans and then to “shared equity” approaches such as shared appreciation loans or resale price restrictions designed to preserve the buying power of the public investment.
Download: Preservation of Affordable Homeownership