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

[Karen Kitchen (grcamom]

Hi Jane,

Besides marketing at family friendly events and in family friendly 
publications, we agreed to allow our membership team to offer up to 10% of 
members (total of 4 homes) the ability to invest 10% rather than 20%. This was 
specifically designed to attract younger individuals, couples or families who 
were first time home buyers. We were able to meet our financing goals and 
attract a few younger members who would otherwise not have been able to buy 
into our community. Our community, Bozeman Cohousing, is currently under 
construction with move-in dates expected for early summer, 2023.

Karen Kitchen 

Sent from my iPhone

> On Nov 10, 2022, at 12:32 PM, Sharon Villines via Cohousing-L <cohousing-l 
> [at] cohousing.org> wrote:
> 
> 
>> 
>>> 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
> ----
> Sharon Villines
> Takoma Village Cohousing, Washington DC
> http://www.takomavillage.org
> 
> 
> 
> 
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