RE: Median Individual Investment
From: Rob Sandelin (floriferousmsn.com)
Date: Mon, 22 Dec 2003 16:27:08 -0700 (MST)
Cohousing uses private ownership, private incomes as the basis of its model.
There are many other types of communities with different models.  The reason
cohousing uses the private ownership model is to get financing for
construction and then mortgages.  The costs of new construction vary with
locale and type of project, most cohousing is Urban to Suburban with
attendant high land costs, and most cohousing is built all at once as a
large capital project by hired contractors. In most areas there are numerous
building code type requirements for drainage, parking, etc, which make
development of ANY property fairly expensive. Thus the baseline of over a
hundred thousand for a home.

There are exceptions to this however. There are some cohousing projects done
as building lots, with communities buying land, developing lots, and members
buying lots and then building and financing their own homes, with some
percentage for common elements. However, a key component of any investors
decision is the question, if this does not work out can I get my investment
back? Thus bank financing broadens the pool of prospective buyers hugely. If
everyone has to self finance, you get a very small pool of buyers, and thus
the issue becomes, maybe I can't get my investment back, and the prospective
member then has to evaluate how much they are willing to invest and
potentially lose. The mortgagability of a community home is thus one way to
encourage home buyers that this is not so weird a scheme that I am going to
lose my capital if I invest. Being backed by banks creates a level  of
security of investment, because banks are conservative by nature.

There are lots of intentional communities founded by people with resources,
who have given those to the community, and thus setup low to little
investment requirements for all future members. I know of none that call
themselves cohousing, although many projects have had members invest much
more than their share in order to secure construction loans. I know that in
Washington State, cooperative ownership has a great deal of problems
attracting funding. The Songaia Community near where I live had to abandon
their cooperative ownership plans at the 11th hour in order to build their
project. Apparently the east coast seems more friendly to coops.

The burden of the individual 30 year mortgage often drives both adults in a
household to earn income, and this reduces time available for community
building work. This is often a key conundrum of cohousing, where people have
high desires and expectations for community engagement but find
disappointment in actual performance.  In some cases in my own community
there are families who have undertaken whoppingly huge mortgages, and this
impairs their ability to be a part of the very thing they presumably pay so
much money for. Private real estate also sets up an expectation for profit
making upon turn over, so houses that cost $150,000 to build are sold for
$300,000. They then go on the market again at a yet higher price, each
transaction driving up the cost until they reach a ceiling and stay on the
market for months and never sell, the final owner having to reduce profit
expectations or even take a loss.  This results over time in a economic
fence around the community which keeps out teachers, single incomes, etc.
and skews the membership to upper middle class or folks with equity from
selling homes in other places. This is also a side effect of mortgagability,
because banks require no constraints on being able to sell foreclosed
property, so limited equity models also face skeptical bank financiers.

How many non-profit coops will finance a 6 million dollar construction
project? This is a pretty reasonable figure for a 30 unit development with a
large expansive commonhouse. The world of non-profit financing is typically
maxed at a million, thus a much smaller community. The average size of
cohousing is recommended at 30, and one of the reasons some communities have
gone much higher is to extract value in shared cost to reduce  individual
prices. At 50 units, you can have a fairly low new construction cost since
you are spreading the land and common element development costs over more
homes. But then it appears that larger communities have trouble bonding.

There is also built in to all this a certain level of middle-class housing
expectation which drives the design process. I have yet to see much self
development in cohousing, where people actually build their own spaces. I
think Sharingwood is one of the very few examples of cohousing where a shack
made of recycled materials and a tiny owner built cob cottage could be
allowed. Of course we have tons of huge custom designed, high priced homes
as well. It would be an interesting challenge to the concept of cohousing if
somebody actually created a self built, self financed community of low end
shacks, cob, etc and called themselves cohousing. I suspect there would be
more than a few who would not see such a thing as cohousing at all, even if
it followed all the other parts of the cohousing model.


Rob Sandelin
South Snohomish County at the headwaters of Ricci Creek
Sky Valley Environments  <http://www.nonprofitpages.com/nica/SVE.htm>
Field skills training for student naturalists
Floriferous [at] msn.com


-----Original Message-----
From: cohousing-l-admin [at] cohousing.org
[mailto:cohousing-l-admin [at] cohousing.org]On Behalf Of Guy Koehler,
Rivendell Ranch
Sent: Monday, December 22, 2003 10:07 AM
To: cohousing-l [at] cohousing.org
Subject: [C-L]_Median Individual Investment


What is the median buy-in to an Intentional Community?

>From what I have seen to date, typical prices seem to be $200k to $300k.
This burdens an individual with a lifetime mortgage (pay the bank three
times what you borrow over the life of the loan), as well as limit inclusion
of low- and/or no-income.

Is anyone running an Intentional Community as a non-profit Co-operative?

Guy Koehler
Rivendell Ranch
Hoquiam WA 98550

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