Cohousing-L Mailing List: Re: making cohousing affordable

[R Philip Dowds (rphilipdowds]

Here’s one way to look at it:

American households are famous for “low” annual savings rates of 2% to 6% ±.  
In contrast, European households are more consistently in the 13% to 20% range 
… and this is in countries also famous for high government tax rates sustaining 
important public services well in excess of what’s available in America.

For most American households, about 60% of their total net worth is tied up in 
their home equity.  So purchasing a home over time, via a bank loan secured by 
a mortgage, is basically an enforced savings plan in addition to investing in 
more liquid assets.  Some communities have experimented with deed restrictions 
limiting resale price … but of course this also limits the magnitude of future 
home equity.  In theory, the money you don’t spend on getting your coho home 
can instead be invested in stocks, REITs, bitcoin, whatever … but the problem 
is that many American households, instead of “saving” (investing), spend the 
“surplus” on leisure activity, consumer goods, and other immediate consumption.

Summary:  Yes, whatever you come up with for limiting resale prices may broaden 
the range of households that can buy in; but it may also be an interference in 
the long-term accumulation of household wealth.  Be careful.

For my final unsolicited opinion:  Much of what’s wrong in America can be 
traced, one way or another, to gross and increasing inequality of wealth and 
income.  Our country is one where (as Picketty has warned us) the rich get 
richer and the poor get poorer by systemic design and financial engineering.  
We are now one of the most unequal countries in the world.  Yes, we can try to 
mitigate this by tinkering with interest rates or housing costs, but this is 
just fussing at the edges of a huge problem that may eventually bring us down.

———————————
Thanks,
Philip Dowds
Cornerstone Cohousing
Cambridge, MA

> On Jan 26, 2025, at 10:27 AM, Diane <dianeclaire [at] gmail.com> wrote:
> 
> At Cambridge Cohousing we are exploring ways to make units affordable such
> as deed restrictions
> on price increases and an affordability fund for members and sellers to
> contribute to.  We are wondering what other communities have done.
> Diane
> -- 
> Diane Margolis
> 175 Richdale Av.
> Cambridge, MA 02140
> 617 354 1349
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