Homestead and Habitat both operate on a community land trust model with slight differences in approach. Their homes are available to lower-income residents making less than 80% of the area median income. For a family of four, 80% of Seattle area median income is currently $95,300.
Sale prices vary by home size and location, but typically fall between $150,000 and $350,000, a screaming bargain compared to the current $855,000 median home price in Seattle. Like any other homeowner, land trust homeowners get to live in their home for as long as they want (and as long as they’re able to keep up their mortgage payments). It doesn’t matter if their income increases or the household size changes, the home is theirs. They can even pass it on as an inheritance to their children.
“Homeownership is first and foremost about the stability,” said Brett D’Antonio, CEO of Habitat Seattle-King County. “Owning a home means knowing your rent’s not going to go up, being able to put down roots in a community, engage with organizations around you, vote, not be moving around all the time.”
Kathleen Hosfeld, Homestead executive director, argued that homeownership provides a sense of belonging that renting does not. “Ownership says to people you belong here. We have created such a transitional lifestyle around renting, and the housing that we offer to lower-income people is mostly rental housing.”
The tradeoff in the community land trust model is that if homeowners do choose to sell the house, they must do so at a restricted price to another income-qualified applicant. With Homestead properties, owners earn 1.5% equity on their home purchase price each year they live in it. So if they purchased it for $200,000 and lived in it for 10 years before selling, they could sell it for $232,000.
That $32,000 is drastically less than the rate of appreciation Seattle homes are seeing on the open market. But community land trust homeowners almost certainly could not become homeowners on the open market in Seattle, so it’s equity they would not have otherwise built as renters.
For Jones, that tradeoff is worth it. First and foremost, she said, the benefit of the program is simply having a home she can afford: “You’re not going to have to choose whether you can pay your mortgage or you have to buy food.”
But, she continued, “It’s valuable. It’s teaching my children. It’s giving them generational wealth. Even though it’s a program geared around affordable housing, it still makes a difference in so many different ways.”
Habitat and Homestead operate separate programs and have separate portfolios of homes, but Jones’s home was actually a partnership between the two organizations. Habitat built the home; Homestead will steward it in perpetuity. To move in, Jones and her children had to put in the 250 hours of sweat equity that Habitat requires of all homebuyers to fix up the house.
“The resale-restricted model isn’t a great way to invest in real estate and make windfall profits,” said Hosfeld. “But it’s a starter home that puts someone on the path to building household and family wealth.”
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September 12, 2022 at 07:09PM
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How some low-income buyers can afford a home in pricey Seattle - Crosscut
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