Re: Diversity Problem
From: Philip Dowds (
Date: Tue, 7 Aug 2018 10:59:49 -0700 (PDT)
It is a municipally administered home ownership program.  Not being a “housing 
expert”, some of the details are unknown to me, but here’s the basic idea:
      (1) The generic term for this kind of program is “inclusionary zoning”.  
Inclusionary zoning has been in force in Cambridge for nearly two decades now.  
It means ...
      (2) In select zoning districts, developers of big(ger) multi-family 
housing (including cohousing, which is seen by the State as a simple condo 
association), must establish not less than 10% of the units as “affordable” or 
“below market” — for which they get a density bonus (more total units on the 
land).  The idea is that the sales of the “extra” units helps pay for the cost 
of the affordable units provided to the City at well below market rates.  Note 
that the costs and risks of development are entirely borne by the private 
developer; no public money goes into designing or building the project.
      (3) In the case of Cornerstone, the below-market units “donated” to the 
City are re-sold to qualified households for a price well below that of the 
market rate units in the same development.  “Qualified” households means that 
candidate families are matched by size, income and other factors to suitable 
units, which these families can buy from the City for a very low price; the 
qualified household must secure its financing from a private lender.  Once 
purchased, the household can live in the units as long as it like.  But …
      (4) When it sells, the City has the right (always exercised) to buy back 
the unit at a price not much higher than what it sold it for.  The allowable 
appreciation formula can get complex, but appreciation allowed normally weighs 
in at around 1% a year.  So, if one buys a limited equity unit from the City 
for $150K, then ten years later one sells it back to the City for $165K.

In a residential real estate market where average home appreciation is around 
6-7% annually, there is not much “profit” to make from a limited equity unit — 
and that’s exactly the point of the program.  Limited equity home ownership is 
not designed to be a windfall profit for the lucky sweepstakes winner.  It is 
designed to be bridge from rental (no equity) through a City program (modest 
equity) to market rate ownership and a chance for substantial appreciation (in 
an economy where appreciating home ownership is the primary savings vehicle for 
many or most households).

So what makes it work financially?  First, the developers (that’s us cohousers) 
have to find enough “extra” money to build four units they sell to the City at 
a “loss”.  Second, the City has to run the program:  Keep a list of eligible 
households, keep track of its repurchase rights, gather data and run the 
re-sale calcs, renovate the units between occupancies, and so on.  One of the 
downsides is that Cornerstone has no role in selecting a household, and it's 
always possible that the household selected by the City will have zero interest 
in community participation.  In the last several years, Cornerstone has worked 
hard to explain cohousing to the City, and my opinion is that the possibility 
of non-participation has been substantially diminished as a result.

There are many advantages to syncing up with a pre-established public program 
of some kind.  When I suggested a mix of ownership and rental units in 
cohousing, I ducked the question of how the HOA would manage rental housing for 
“affordability”.  Do you really want to ask potential tenants for their income 
history, or work out a quota system for different “races”?  Is it even possible 
to do such a thing without running afoul of fair housing laws?  Coho/US is 
accumulating a body of experience and information on this topic, and you might 
want to contact them directly.


> On Aug 7, 2018, at 12:23 PM, Lynne Markell <lmarkell [at]> wrote:
> I like the idea of a combination of rental and ownership, but how does the 
> new cohousing group get the money to construct the rental units? Even if 
> there was a government program to provide a mortgage, no one provides 100% 
> mortgages.  Where do you get the down payment?  Our members are mostly 
> seniors and are using current house equity to buy their units.
> Could you tell us a bit more about the " limited equity ownership units"? 
> Sounds like a municipal home ownership program. This would suit us fine and I 
> would like to use it as an example with our city and province.  if there is 
> something in writing that would be great or a website I can access.
> Thanks, in advance,
> Lynne 
> Lynne Markell, 
> Lmarkell [at]
> (613) 842-5222
>> On Aug 5, 2018, at 9:31 AM, Philip Dowds via Cohousing-L <cohousing-l [at] 
>>> wrote:
>> National averages are about two-thirds home ownership, one-third rental.  In 
>> Cambridge, MA, the stats flip: One-third ownership, versus two-thirds 
>> rental.  Cambridge is one of the safest, best-organized, well-serviced, 
>> income-diverse, and fine-grain-integrated cities in the nation.  Even so, 
>> many of my Cornerstone friends and neighbors remain convinced that home 
>> ownership correlates with stability and civic responsibility, while tenancy 
>> … well, is it really possible to rely on a neighbor who lacks an equity 
>> stake?  Some think that a high ratio of rentals will hurt our property 
>> values.  At this time, we are 100% owner-occupied.  (I should not fail to 
>> mention that, by zoning requirement, we include four limited-equity 
>> ownership units for which resale is controlled by the City.)
>> If our cohousing goal is to be a better cross-section of society, and to 
>> include greater ethnic and racial diversity, then I think we should be 
>> exploring models where the dwelling unit program is designed as two-thirds 
>> ownership, and one-third rentals — said rental units owned and managed, of 
>> course, by the communal HOA.  And every resident franchised by, and in, 
>> equivalence.
>> Thanks,
>> Philip Dowds
>> Cornerstone Village Cohousing
>> Cambridge, MA
>> mobile: 617.460.4549
>> email:   rpdowds [at]
>>> On Aug 5, 2018, at 8:58 AM, Crystal Farmer <crystalbyrdfarmer [at] 
>>>> wrote:
>>> As far as race, only about 40% of black households own their home, vs 71%
>>> of white households.
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