Shared Equity Homeownership:
The Community Land Trust Model
Shared equity through a community land trust is a model of affordable homeownership that allows income-eligible families to purchase homes at below-market rates. It’s a proven stepping stone on the way to market rate home ownership for low- to moderate income people. (Source: Capital Impact)
We put homeownership within reach by reducing the cost to the buyer two ways. First, the cost of the land is removed from the home purchase, reducing the price by 30% to 50%. Buyers purchase only the home itself with a traditional mortgage.
Second, as non-profit developers of homes, community land trusts build or rehab homes specifically for low- to moderate-income people and take only as much fee as is needed to cover their operating costs.
In shared equity homeownership, homeowners are an essential part of perpetuating affordability. They build assets through principal reduction and sharing in the accrued equity of the home. No homeowner is required to sell their home, even if their income increases. But if they decide to sell the price is based on a formula. This “pay it forward” method means that the home stays affordable to the next income qualified buyer.
As a result, affordability is perpetuated at each address, stemming the tide of displacement of modest-income members of our community who have the opportunity to build wealth, and to thrive in place.