Cohousing-L Mailing List: Re: Financial approach for younger prospective members

[Sharon Villines (sharon]

> On Nov 8, 2022, at 3:57 PM, Jane R. Mueller <jmueller [at] 
> wellchosenwords.net> wrote:

> We would love to devise a financial arrangement that covers the Mission Peak 
> Village's pre-development costs, qualifies the us for needed loans, requires 
> real Member commitment to the project, and yet fairly accommodates the needs 
> of younger Members whose plans may change unavoidably.

Thank you for asking this question and asking it so well. Often we get 
questions that so open-ended or unfocused that it’s hard to respond without 
writing a book. The essential question is how do we help the 20 and 30 
somethings who have young children and no savings join cohousing? It is a 
question that everyone is interested in solving and not just something to be 
complained about. 

In addition to the financial challenges as others have mentioned is the time 
factor. With young children spending time and energy on something that might or 
might not happen at some point in the future takes energy away from more 
immediate needs. But keep them on your list; they join late.

I’m currently reading "Owning Our Future: the Emerging Ownership Revolution" by 
Marjorie Kelly who targets ownership as the fundamental inequality of our 
economy. The key isn’t that the top 1% percent has all the money. The key is 
that they own or can own and can prevent others from owning anything that can 
be owned.

In housing, huge investment companies are purchasing scads of real estate. This 
raises home prices so ownership is increasingly impossible and people are 
forced to pay rents so high they have no chance of saving money for their own 
future. Investors extract value without returning any value the community.

In large cities with rent control laws there are those who believe that rent 
control is the reason there are so few apartments available because it is 
cheaper and less fuss to keep them empty than to rent them. 

Kelly is interested in models of ownership that distribute wealth equitably but 
believes that Capitalism vs Socialism is a 20th century opposition that is 
irrelevant for the 21st century. She is finding  businesses that are worker 
owned and controlled, independent of state control. She also wrote "The Making 
of a Democratic Economy by Building Prosperity for the Many, Not Just the Few." 

Cohousing has created communities of people who share their daily lives and 
control their place, their neighborhood. It has also created an opportunity to 
practice democratic governance on a broader scale than in the home, and at a 
deeper level than in towns and cities.

Cohousing has always been concerned with sustainability and deep personal 
values. A basic principle of cohousing from the beginning was using building 
practices that stress strong and lasting architecture rather than shiny surface 
finishes and sizes as large as possible. What we haven’t been able to figure 
out is a fair and equitable housing economy; not that we could accomplish the 
economy, but we don’t have a vision of how that might work. We have figured out 
many ways to negotiate the current home financing system to do what it is not 
intended to do. Even how to include a few units that have government subsidies 
and can only be purchased by those who would not be unable to purchase 
otherwise.

But is that regenerative? Does it have a future? Cohousing home prices have 
increased to the level that purchasing a unit requires two professional incomes 
or two lifetimes of savings. It is still only available to those who have have 
above-average privileges. Contributing to a regenerative economy requires a 
model that is much more broadly available.

We haven’t conquered the economic realities that restrict our ability to be 
regenerative. 

Cohousing is successful socially and economically. It retains value and is 
increasingly in demand. It has also had a major influence (one can argue) in 
the friendlier functioning of mainstream condominiums. We have gotten to the 
point of attracting people who trust the movement enough to invest their all 
their own money and are less dependent on bank financing. In the last few years 
at least one household at Takoma Village paid cash for a unit in the 
half-a-million dollar range. No one who invested in the community originally 
could have come close to doing that. If they had a trust fund worth that much 
their trust officer wouldn’t have signed off on such a risky deal even in the 
the late 1990s, almost 20 years after the first communities were built in the 
United States.

What Kelly is studying is people who are developing regenerative, sustainable 
businesses by sharing resources in ways that benefit all their members. Without 
creating dependencies and while building wealth.

The most frequent solution to broadening accessibility in cohousing is more 
rental units. But owners sell their properties with substantially increased 
wealth while renters will move out with what they moved in with, if not less. 
Renting in most cases perpetuates generations of dependency on owners.

Government programs often just transfer money from one pot to another pot but 
that isn’t an economic system. It can only happen once. Wealthy people have 
always shared their wealth with the community — some much less than others— but 
the key is figuring out how money can it be shared to create wealth on an 
ongoing basis. The giving a fish or teaching how to fish — or in this case 
allowing people to fish for themselves. Our economy prevents this in many ways.

Price caps don’t work, for example, an owner can only sell at 10% above their 
purchase price or 20% lower than market. That doesn’t create an economy. It 
isn’t regenerative. And it is anti-wealth. 

One of our members suggested that we adjust our condo fees favoring people who 
have more children. The older people would be happy to pay more if it ensured 
having more kids running around. But those kinds of adjustments don’t go very 
far in correcting or building a new economy. It’s an accommodation that works 
temporarily. (And far more expensive for the parents than the lower condo fee 
could compensate. We have had no takers.)

In the 1950s, people were able to assume existing mortgages that had a lower 
interest rate. Mortgages didn’t churn to take advantage of ever increasing 
interest rates. Ty Albright reports that banks lose money on a mortgages less 
than $100,000 just because of the paperwork and the labor to keep track of it. 

And regular homeowners would also hold mortgages for regular buyers. I remember 
going once a month out to the boondocks with my grandparents to take the 
mortgage payment. The previous owners had downsized to a cabin on a small lake 
in the middle of no where and held the mortgage for my grandparents. They were 
thus able to receive more interest than they would have received on savings and 
my grandparents were able to pay less than they would to a bank. The owners 
could also evaluate the buyers on the basis of personal qualities that made 
them trustworthy instead of having to meet the bank’s fiscal rules.

So I guess that points to the community, perhaps, holding mortgages for young 
parents and children. Or a subgroup of members forming an investor’s group to 
finance homes for buyers in certain demographics. Perhaps a cross community 
fund. The key is to avoid the extractive economy that takes wealth out of 
communities like the Chinese investors buying the midwest.

Sharon
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Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org