Low Income [ was Affordable Cohousing] | <– Date –> <– Thread –> |
From: Rod Lambert (rodecovillage.ithaca.ny.us) | |
Date: Thu, 24 Sep 2015 07:05:53 -0700 (PDT) |
Re: keeping it affordable/building equity, Curious about how Philip's group limits equity. Perhaps they are already doing this, but wondering if using local median income as a benchmark for affordability could work, at least in part. What if a number of units were built to be sold such that someone earning say, 80% of median income (statistics kept by local government) could afford it. The requirement from this buyer in return would be that it had to be resold in perpetuity for 80% of median. That would allow for some gain in equity but it would presumably keep it "affordable". The financial logistics for initial build could be as suggested by earlier posts. Not sure if/how condo docs could reflect this restriction but I think it can work in a coop legal structure. Had to smile at Philip's mention of management challenges. Our human quality of hating to see someone getting a better deal than we are creates many difficulties. Perhaps at least the fact of not being able to participate in equity at the same level as the others will stimulate the "undeserving" to move on to units that allow unlimited equity and pass the unit on to the more "deserving"? Rod Lambert EcoVillage at Ithaca, NY >Date: Wed, 23 Sep 2015 10:34:17 -0400 >From: R Philip Dowds <rpdowds [at] comcast.net> >To: Cohousing-L <cohousing-l [at] cohousing.org> >Subject: Re: [C-L]_ Low Income [ was Affordable Cohousing >Message-ID: <C0EB96F9-F950-478F-9E85-535FB49FD59E [at] comcast.net> >Content-Type: text/plain; charset=utf-8 *>There are various low income ownership models out there. For instance, some involve long-term, low interest loans of lenient qualification standards. Most, however, try to deliver a house for significantly less than the "fair market? price. The price of this ?bargain? house is low because somebody subsidized part of the cost of delivering the unit. Maybe it was the government using public money or donated land; or maybe it was an internal transfer (either voluntary or forced) from market units to the subsidized unit. In any event, the "market rate" unit may get sold for, say, $200,000, and the identical ?affordable" unit right next to it for, say, $130,000. Not to just anyone, but to a certified low income, pre-qualified buyer. >So where does limited equity kick in? What good does it do? Part of it is related to preventing "windfall? profits; nobody can feel good about the low income buyer getting the unit for $130K, then selling it for $210K six months later. But in the bigger picture, most hope that affordable units will stay affordable over time, doing a consistent, reliable job of supporting income diversity in the community. So when the affordable unit goes back on the market five, ten, or fifteen years later, it should go back on at a written-down price, not at a market rate price. >So how do we do this? Well, one way is for the government to pony up public money at each transfer, permanently keeping the price of this designated unit artificially low. The government, needless to say, remains very wary of assuming a permanent unfunded and uncontrollable obligation of this sort. The other way is limited equity: Upon selling, the beneficiary of the subsidized unit can collect a small profit, but not a big one. The artificially constrained sale price of the affordable unit now benefits a new certified low income household. The overall idea is that limited equity ownership is not a plan for life, it?s a stepping stone into the housing ownership market. Ideally, limited equity units are turning over with some regularity, as households prosper and move on to a better solution. >At Cornerstone, we have four limited equity units. I must mention two on-going management challenges worth keeping in mind. First, we have no communal way of influencing the transfer of these units, and sometimes they have been occupied by households seeming to have little interest in the cohousing culture. Second, it sometimes appears that the households living in the affordable units have more financial flexibility than some of the market rate households ? so it?s difficult for our community to give consideration to operating discounts (e.g., reduced annual >assessments) for the affordables. >Philip Dowds >Cornerstone Village Cohousing >Cambridge, MA >> On Sep 23, 2015, at 9:46 AM, Sharon Villines <sharon [at] sharonvillines.com <sharon [at] sharonvillines.com>> wrote: > > The problem with non-ownership, restrictions on resale prices, and subsidies is that low income people also need to build a sustainable future. We had a family move to Takoma Village as renters from a community in California (not cohousing) that was a non-ownership model. They had physically built their home themselves and helped others build theirs. But unless they stayed, they had no financial benefit from that. In their late 50s they had no equity to purchase anywhere else. When they moved closer to a better musical education for their daughter, they had a much lower standard of living and were having difficulty providing the musical education their daughter for which they had moved. > > The best way to limit prices is to build to the price. Still everything that goes up, goes up. It?s called capitalism. Why shouldn?t low income people have the same ability to become self-sustaining as other households?*
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Low Income [ was Affordable Cohousing] Rod Lambert, September 24 2015
- Re: Low Income [ was Affordable Cohousing] R Philip Dowds, September 25 2015
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