Re: co-housing and real estate investments
From: Munn Heydorn (munninteraccess.com)
Date: Tue, 14 Feb 95 10:36 CST
On Mon, 13 Feb 1995 16:23:24 -0800 lmd [at] beauty.batnet.com (Loren Davidson) 
wrote, in part:

>At 05:16 PM 2/13/95 CST, John Eaton wrote:
>>> 
>>> We are drawing up our documents, and are considering a clause which grants 
>>> the community the option to buy any member's lot at a "limited equity 
value,"
>>> The intent of this clause is to prevent the value of these lots from rising
>>> so rapidly that they are no longer affordable to moderate-income families.
>>> (As community living becomes the trendy lifestyle of the future!) 

Someone (sorry, lost who) else said, in part:

>>Bad idea. 

-----snip-----

>>Giving the community the right of first refusal is a better idea. Let the 
>>market determine the price. 


>I don't agree.  Since we're taking "opinions" and not just "experiences" on
>this one, let me add  my $0.02.
>
>I've been reading a lot lately about communities and various development
>types, and about such things as Community Land Trusts.  This sounds a lot
>like a CLT in intent if not in actual form.  

-----snip-----

I deal in my nonprofit life with housing affordability issues in a pretty 
wealthy county constantly.  I can understand a restriction on what a person 
can "make" from the resale of any home where that person has received some 
sort of financial subsidy.  Where it is that person's hard earned dollars at 
work and they/he/she paid or incurred debt for a full share of costs, why 
shouldn't they profit from any future sale whether they are in a cohousing 
community or otherwise?  A right of first refusal as suggested might be 
considerably more palatable I would think.

For most people, a home represents the bulk of their net worth and in terms 
of retirement or access to funds for larger emergencies or whatever a 
restriction on "profit" may work a hardship. While historically home prices 
have risen faster than inflation, there is considerable thought in the real 
estate community that this may not always be true in the near future; partly 
for demographic reasons and partly because no tree grows to the sky (even 
medical cost increases have tempered, albeit with govt prodding and scare 
[now if we can temper my kids tuition rate increases!]). 

I would think that a profit restriction absent subsidy of the purchaser 
would not be a very popular idea among prospective buyers - now or later - 
unless they are very dedicated to the idea of equity/affordability in 
housing and willing to pass on to others a part of their future net worth 
increases without restriction.  That restriction in and of itself might have 
a depressing effect on value increases in  a cohousing community where that 
restriction is present.  Mind you, I am not saying that housing 
affordability for lower or middle income persons is not an important issue 
in our country, just questioning the willingness of a substantial number of 
prospective purchasers to make that future prospectively substantial 
sacrifice.  Do other cohousing communities restrict profit?  How hard was it 
to find buyers with that restriction present, if so?

Regards,
Munn
Munn Heydorn, munn [at] interaccess.com
Winfield, Illinois

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