In the past few months, America’s biggest technology companies committed billions to address the affordable housing crisis. That was the easy part. Now comes the hard part: deciding how to spend it.
There are a few obvious options, namely rental assistance and new housing construction. But there’s another option, one that for 50 years has successfully enabled affordable homeownership but has never had the capital behind it to work at a large scale: community land trusts.
In short, community land trusts separate the ownership of land from the structures that occupy it, locking in lasting affordability and protecting neighborhoods from displacement. A nonprofit organization owns the land — controlled by residents and business owners who occupy it — and caps the resale price of the structures. When a home is sold, a portion of equity gained from increasing home value over time is automatically retained using a shared equity resale formula, enabling other lower-income households to purchase the same home at below-market cost.
Community land trusts are not new. In 1969, a group of prominent civil rights leaders founded New Communities Inc., the country’s first community land trust with more than 5,600 acres of land in Albany, Georgia. During a time when systemic dispossession had stripped black farmers of millions of acres of land and caused more than 96% of black-owned farms to close, New Communities was our nation’s first example of an innovative model of shared equity, in which community-controlled nonprofits own the land and grant long-term leases to would-be homeowners.
This experiment was an overwhelming success, eventually growing to the size of Rhode Island and becoming the largest Black-owned property in America. That success was stymied when New Communities was forced into foreclosure after Georgia’s then-governor denied them a promised grant, as well as other sources of federal agricultural finance earmarked for New Communities’ survival.
As cities continue to become unaffordable, the model pioneered by New Communities 50 years ago has slowly spread from rural to urban areas as a sustainable approach to preserving permanently affordable homeownership, especially benefiting lower-income households of color and countering the combined impacts of long-term systemic housing disparities, redlining, foreclosure, displacement and gentrification.
Earlier this year, the most comprehensive study of shared equity homeownership programs conducted to date showed that the median shared equity household accumulates $14,000 in earned equity (compared to a median initial investment of $1,875), and that nearly six out of 10 shared-equity homeowners use their earned equity to later purchase a traditional market-rate home.
Here in Washington, there are 16 community land trusts, as well as a regional community land trust organization, the Northwest Community Land Trust Coalition, which supports CLT activities in the state and in Oregon, Idaho, Alaska and Montana.
In Seattle, Homestead Community Land Trust has been operating for a quarter-century in the Puget Sound area and has more than 200 high-quality, affordable homes in its portfolio, with three projects that will start construction this year. In the Central District, there will be 11 affordable homes, while in Renton and Tukwila there will be 12 and 11 such homes, respectively. And, over the next six years Homestead will be developing projects in Phinney Ridge, the Central District and Rainier Valley that will total nearly 100 more affordable homes.
Critical to its success, and to many other community land trusts across the county, is that Homestead incorporates a holistic approach to home buying, combining housing development with counseling, education and other support activities — including down payment and closing assistance — to participants in their programs. And by creating a more stable environment for its homeowners, Homestead has built healthier communities and increased civic engagement.
Community land trusts also protect owners from economic downturns, with their homeowners nine times less likely to be in foreclosure proceedings than home buyers with traditional home mortgage arrangements.
Despite such an impressive record of achievement, though, only around 250 community land trusts exist today, providing housing for about 10,000 residents in rural and urban areas nationwide. They exist in places like New York City; San Francisco; Washington, D.C.; Denver and many other major metropolitan areas that are at the front lines of the affordability and gentrification crisis.
And it is a crisis that is getting worse every day, especially for low-income and minority communities. Median home prices increased 4.2% from a year ago, while growth in median household incomes continued to trail. While the national homeownership rate is 64.2%, many cities have far lower rates — less than one-third in New York City and below half in Seattle, San Francisco; Washington, D.C.; and Los Angeles. Nationally, less than half of Black and Hispanic households are homeowners, compared to nearly three quarters of white households.
Solving this crisis demands bold action and new solutions. It is time we give community land trusts a chance to succeed at scale. And the billions tech companies have allocated to address the crisis can unlock that potential.