[image credit: City Lab]
Home ownership is impossible for many people
In most cities, the average home price is well above what most people can afford. A poor credit history, student loans, or simply a lack of earning power, will disqualify most loan applicants.
Solution: Nonprofit assists homebuyer with purchase, and shares equity in return
Champlain Housing Trust offers a down payment for a home, paid for with government funds. Then CHT screens potential buyers, who are members of the trust, based on their assets and income. (To qualify, a family of four must earn $80,200 or less in gross annual income, they must not own another home, and they must not have significant assets outside of savings for retirement.)
The homeowner then gets a mortgage from a bank and pays the principal each month. Usually, the homeowner also pays for the closings costs and any upkeep and maintenance. When the homeowner decides to sell the property, he first must offer it back to the housing trust. Both the homeowner and housing trust share in the home's appreciation. (That's why it's called "shared equity"—25 percent of the appreciation goes to the homeowner and 75 percent to CHT). The homeowner also recoups all of the equity that he built up each month through making principal payments, as well as any money he has spent on capital improvements (a figure determined by an independent appraiser).
Housing experts like this shared-equity model, also known in housing circles as community land trusts, because "the potential is that, if it's done well, it occupies the middle rung between renting and owning," says Brett Theodos, a senior research associate at the Urban Institute, a nonpartisan think tank in Washington. "This is a market hit solution."