Here's a stab at answering Barb's qs: >The way the land trusts are structured (at least as I >understand it) seems to deny people the opportunity to >accumulate much wealth through homeownership. A >non-profit owns most of the equity in the property and >the homeowner gets a little bit on their way out. For >many people, the only way they accumulate any wealth >at all is through their property values. > The target population here is the growing group of people who are working and earning a steady paycheck, but one that just isn't large enough to afford a market rate home. We see this as a step between rental -- in which the family is earning no equity -- and conventional homeownership.
It certainly is not for everyone. If a family who wants to own a home wants to wait to see if they can get into conventional homeownership, by all means, do it. It's a better deal for them, no doubt. But for those who want to get a home now and start earning some equity and enjoying some of the other benefits of homeownership, this could be a good option. > >Could we accomplish homeownership for low income >people by simply buying down mortgages? A direct one >time pay-out to bring the mortgage down to what the >family could reasonably afford. The family then owns >the home and gets to keep the wealth they accumulate >over the course of time. > The problem with mortgage write down programs is that you are subsidizing the family, not the home. So, it may cost the government (or whoever is offering the subsidy) $30,000 to write down the cost of the home for a family earning 80% of area median income today, but in 5-7 years, that amount will be more like $70,000. (These numbers are just by way of example.) The government doesn't have enough money today to meet the housing need. Buying down mortgages just makes it more expensive over time. (You know I have a spreadsheet that compares a CLT transaction with a conventional transaction, including the benefit to the seller if they sell the home after 7 years. In reality, a CLT homeowner can walk away with a good downpayment on their next home, which could be a conventional home, if they are looking at their home as an investment. Let me know if you want me to send you the spreadsheet.) I also want to address the "wealth they accumulate" comment. In reality, the factors that go into the appreciation of a home's value are twofold: 1) what you put into it, and 2) what happens around it. In my mind, in Minneapolis, most housing values have gone up in recent years because of "social appreciation": neighborhood improvement, decreasing crime rates, a good economy. In the next few years south Minneapolis will see even more public investments with the Midtown Greenway and Hiawatha LRT (just to name a few) that will push housing prices even higher. It is the larger community that is causing this appreciation, so what's so wrong with preserving some of this appreciation for future low to moderate income families to enjoy? >I am not sure what the rules >are with the Habitat for Humanity houses. If the >person who gets one of their houses sells it, do they >get to keep all the equity? Does someone out there >know? > Oh, I'm going to learn more next week, but I think if they want to sell within the first five years, HFH buys the house back, but after five years, they get to keep it all. > >The cost to administer mortgage subsidies would be far >less than establishing some non-profit to own all this >land, suck out a big fee to manage it all and leave >the low income homeowners barely better off than when >they moved in. > The CLT brings more to the table then just a piece of paper. They bring an organization of community members designed to support the homeowner (through classes on how to maintain a home, through possible foreclosure prevention, etc.), and also help develop the connection between the homeowner and other community members. It's sort of like a mix between a CDC and a neighborhood organization. As part of this Minneapolis Community Land Trusts Initiative, we are being encouraged to develop the CLT as an arm of an existing organization to avoid duplicating overhead. Also, we are seeking to develop a model that is connected to already exisitng activities so we add value to what's happening a preserve affordability of the homes we are currently investing in, rather than duplicating what is already going on. > >The other option is to buy these houses, and make them >the property of the Minneapolis Public Housing >Authority. They already manage lots of scattered site >housing throughout the city and have the mechanism in >place to do it without creating yet another >bureaucratic structure to manage what appear to be a >parallel type of housing. > >What about the low income people who don't want to own >a house? I met many of them when I was working to >stabilize the Whittier coops. They just don't want >the responsibility of owning a home. How does this >plan address more affordable rental units? With >15,000 homeless people, I think we might be able to >provide the increased housing quicker by concentrating >on construction of more high density-mixed use >developments than trying to buy up 15,000 city lots. > CLTs are not the be all end all of all of the city's affordable housing needs. It is not for everyone. But it is for a growing number of families and for a growing number of neighborhoods, as people who own their homes look around and see that they could not afford to buy their home today if they had to. (Here's a plug for MICAH's housing trust fund proposal, which asks for $10 m a year to develop more rental units targeted at a lower income population.) >Not sure. Just throwing it out there for discussion. > >Barb Lickness >Whittier > > >__________________________________________________ >Do You Yahoo!? >Check out Yahoo! Shopping and Yahoo! Auctions for all of >your unique holiday gifts! Buy at http://shopping.yahoo.com >or bid at http://auctions.yahoo.com >_______________________________________ >Minneapolis Issues Forum - A Civil City Civic Discussion - Mn E-Democracy >Post messages to: [EMAIL PROTECTED] >Subscribe, Unsubscribe, Digest option, and more: >http://e-democracy.org/mpls > > _______________________________________ Minneapolis Issues Forum - A Civil City Civic Discussion - Mn E-Democracy Post messages to: [EMAIL PROTECTED] Subscribe, Unsubscribe, Digest option, and more: http://e-democracy.org/mpls
