Cohousing-L Mailing List: Re: Variable Rates for lots

[David Mandel (dlmandel]

Carrie asked:

"Have any of you used any criteria other than "desirability" of
lot selection to differentially price lots?  Have any of you established a
sliding scale to purchase lots, based on ability to pay?"



We sold completed homes, not lots. But we all know that the speculative
value of real estate is in the land, not the sticks and stones. So the
question is important.

I would urge you to set the lots' prices relative to each other in
proportion to what you can best judge their market value to be. Try to get
the help of an appraiser; add your own criteria of desirability if you
wish, taking into account cohousing values perhaps (proximity to common
house, perhaps, as an example). Just don't agonize over it too much, since
there's a lot of subjectivity in the whole idea of appraisal, whether
relative to the outside market or relative to the other locations in a
subdivision.

The point of doing this is to try to make it fair for everyone, to prevent
someone who bought a "more desirable" from ending up with a windfall upon
selling it if you were to sell all lots for an identical price.

It's admirable that you're thinking of charging less for lower-income
people, but I would advise against doing it in this fashion. If they pay
less, then someone else must pay more. And talk about windfall: If this
low-income person becomes high-income in a couple years, how will everyone
else feel? And when she sells, there's probably no way to keep the house
affordable for the next owner and the seller who bought at a discount
cleans up. A recipe for social conflict, if you ask me.

Instead, I'd work on locating a pool of money that can be LOANED to
low-income buyers as a silent second mortgage accompanied by certain
understandings about reselling in the future to similarly low-income
people, who will also be able to borrow the same money after the initial
purchaser repays it to the pool, and perhaps limit the price that can be
charged upon resale by a subsidized borrower. This pool could conceivably
come by charging more to market-rate buyers, but I'd try first to find an
outside source of funds. You can make a good case to your local government;
most are required to make some funds available for affordable housing, and
mixed-income housing is trendy these days. I'd also suggest that some
outside body -- the local government agency or a private nonprofit --
administer this pool to keep community members from having to make crucial
financial decisions that affect their neighbors as individuals.

If you or anyone else wants more details about how we pulled off such a
scheme, contact me. It appears that Jewell Hill Cohousing in Sebastopol,
Calif. is about to do something similar.

And you might want to take a look at my more comprehensive outline of ideas
on how to make some of your units affordable for lower-income people.
Available by mail or e-mail, and eventually at the cohousing web site.

David Mandel, Southside Park, Sacramento