Does Shared Equity Housing Work?
Shared equity housing strategies are drawing increasing interest from people in all corners of the housing and community development field. In a new paper based on research I did as a Joint Center for Housing Studies Community Service Fellow with NeighborWorks America® last summer, I provide a comprehensive overview of existing literature on the topic with a focus on identifying common elements, benefits, and drawbacks of several different approaches to shared equity housing.
I begin by identifying four basic approaches to shared equity housing: community land trusts, limited-equity housing cooperatives, deed restriction programs, and resident-owned communities (an approach generally used in manufactured home communities). While the details of each approach differs, they have several aspects in common, most notably: (1) resale restrictions supporting lasting affordability of housing, 2) sharing of the risks and rewards of homeownership, 3) ongoing stewardship of land, and 4) community control and democratic decision-making. Taken together, these approaches aim to establish lasting affordability, create community control, and build wealth for people with limited incomes.
My literature review indicates that while shared equity housing programs support each of these goals, success depends on local context, stewardship capacity, and program design. Studies of increasing scales have shown that shared equity housing programs deliver subsidies more efficiently than traditional homeownership programs by successfully preserving affordability between subsequent owners. Shared equity housing can also give people who are priced out of market-rate ownership the opportunity to build their assets with fewer risks than in traditional homeownership. Equally important, the democratic governance and community control provisions that are fundamental to many shared equity programs can be catalysts for equitable community development beyond the provision of affordable housing.
At the outset of my research, I found that theoretical, empirical, and practical approaches to shared equity housing were manifold. In particular, as the field of “traditional” affordable housing and community development engages more and more with shared equity housing, the literature surrounding it has come to focus increasingly on its technical elements and measurable outputs, like resale formulas, wealth creation, and unit production. For nonprofits with limited resources and funding that is contingent on outcomes reporting, these are critical pieces of information. For many practitioners and scholars, however, these large-scale, results-focused studies seem to erase what they see as the core tenets of shared equity housing: democratic community control and land stewardship.
These core tenets are rooted in the history of shared equity housing in the United States. For the Civil Rights activist founders of the first community land trust (CLT), New Communities, Inc., in Albany, Georgia, claiming land in stewardship with Black farmers was a means to regain control over basic resources from which the intersecting systems of White supremacy and private property had excluded them. Community control was also central to the urban CLTs that emerged in the 1980s, formed by residents of low-income Black communities to reassert their right to self-determination in the face of both gentrification and disinvestment.
This history shows that shared equity housing has played a key role in supporting movements for racial equity. Moreover, the long-term affordability and asset-building potential of shared equity housing strategies can be particularly valuable benefits for communities of color, who disproportionately face displacement and have been systemically excluded from the benefits of homeownership through segregation, redlining, and subprime lending. However, existing data from a large sample of shared equity housing programs show that, while such programs are serving increasingly diverse communities, they still house disproportionately White residents when controlling for income. Thus, for shared equity programs to effectively fulfill racial equity commitments, a better understanding of how shared equity can be leveraged to support communities of color is key.