Emily Thaden, Ph.D.
Research & Policy Development
National CLT Network
HISTORY OF U.S. HOUSING VALUES
FORECLOSURE FILINGS ON U.S. PROPERTIES BY YEAR
1 in 45
housin
g units
RealtyTrac.com
1 in 45
housin
g units
2009 HOMEOWNERSHIP RATES BY INCOME QUARTILE
Economic Policy Institute, 2011
2004 & 2011 HOMEOWNERSHIP RATES BY INCOME RACE
www.infoplease.com
BEFORE THE CRISIS…
1 OF 2 LOW-INCOME OR MINORITY HOUSEHOLDS
DO NOT MAINTAIN HOMEOWNERSHIP FOR 5 YEARS
“HOMEOWNERSHIP IS NOT FOR EVERYONE.”
HOMEOWNERSHIP MATTERS
Herbert & Belsky, 2008; McCarthy, Van Zandt, & Rohe, 2001
Proportion of Wealth from Homeownership in...
“HOMEOWNERSHIP NEEDS TO BE
DONE DIFFERENTLY.”
Resale-restricted, owner-
occupied housing for
lower income households
that remains affordable in
perpetuity.
Montgomery C...
1. Limited Equity Housing Cooperative
Capital Manor Coop
102 units, Washington D.C.
Single-family homes
Albuquerque, NM
2....
2. Wealth creation for
households
1. Increased access to
homeownership
3. Permanent affordability of homes
(i.e. sustained...
1. INCREASED ACCESS TO HOMEOWNERSHIP
Temkin, Theodos, & Price, 2011
2. WEALTH
CREATION
Temkin, Theodos, & Price, 2011
3. PERMANENT AFFORDABILITY
Temkin, Theodos, & Price, 2011
% of Median Income
needed for first purchase
% of Median Income
...
IS HOMEOWNERSHIP
SUSTAINED?
CLT
Samples
Organizatio
ns
Outstanding
Loans
2010 62 3,143
2009 42 2,173
2008 50 1,936
v. MBA
loans
NATIONAL RESEARCH STUD...
CLT LOANS OUTPERFORM THE MARKET
CLT LOANS OUTPERFORM ALL LOAN TYPES
STEWARDSHIP MATTERS
Policies & Practices
Approve home financing
Educate pre-& post-purchase
Interact with mortgage lenders...
STEWARDSHIP MATTERS
 Homeownership is entered & sustained
 Stewardship matters
 CLTs provide a better way to do
homeownership
IMPLICATIONS
QUESTIONS?
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Emily thaden monday evening outperforming the market

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  • However, what less people are aware of is that the conventional market’s provision of homeownership has been failing to deliver successful homeownership opportunities to lower income and minority households long before the crisis. Reid conducted a longitudinal analysis on a nationally representative sample of first-time low income and minority homebuyers and found that less than 50% of them were sustaining homeownership for five years. We also know that owners of lower cost homes need to retain ownership for roughly 5-10 years in order to see financial returns. Hence, economic gains from homeownership has literally been equal to a coin toss for lower income and minority families when they enter in the conventional market.
  • And this has led some commentators, especially political conservatives, to state that the lesson of the foreclosure crisis is that, “homeownership is just not for everyone”. However, the implicit “everyone” [CLICK] in these statements are lower income and persons of color. But limiting access to homeownership for these households would likely cause more injury, not less.
  • As homeownership is the #1 factor that explains wealth among lower income and minority households. In fact, it is the majority of wealth held by these households. And there are good reasons for this:No other investment can be leverage as much as homeownership.Homeownership functions as a consumption good as well as financial investment, as these households need to pay for shelter any way.Lastly, homeownership comes with an array of benefits, including individual and social benefits that indirectly support economic outcomes. Hence, homeownership matters to positively change the intergenerational outcomes of lower income and minority households.
  • Consequently, other housing advocates reject that “homeownership is not for everyone” and instead posit that it needs to be done differently—to find an alternative to conventional renting or home owning options that will be more sustainable, retain opportunities to build wealth, and change the intergenerational outcomes of lower income and minority families. The model they are turning to is shared equity homeownership, in hopes of a building a third sector that is not renting and not conventional homeownership, but a tenure alternative.
  • And there is data to backup the performance of SEH programs on these three main outcomes. A study of 7 large shared equity programs from different cities located in different regions was conducted. All programs had anywhere from 60-440 homes and had resold anywhere from 40-200 homes over time. This darker bars shows the median income of the cities where the program’s are located and the lighter bar shows the average income of homebuyers in their programs. They found that homeowners made anywhere from 35-73% of the median household income, and the average was around 50% of the AMI.
  • They are also likely to build wealth. At first glance, many folks are concerned that shared equity homeowners won’t realize financial returns due to the restrictions on the resale prices that they agree to. However, that study of 7 shared equity programs showed that the individual rates of return-shown here in green-for shared equity owners was significant. And it was much better returns than if the households invested the same amount money in the stock market or treasury bonds. Hence, investing in SEH homeownership does in fact yield wealth.
  • Lastly, the study of the 7 SEH programs also showed that the model did what is promised: When SE homes are resold, they maintain their affordability for lower income households in the future. This graph shows the median household income for the first purchase in gray and then every subsequent purchase in black. As you can see here, the majority of programs did not see erosion in affordability. Hence, they were in fact preserving the public’s investment in affordable homeownership. 18:00
  • Alright so now let’s move to the second article of the dissertation, which focuses on the national level.As I reviewed previously, an existing study of 7 shared equity programs found that SE increased access to homeownership for lower income households, it also supported that those households build wealth, and lastly it showed that the program were in fact, preserving affordability over time. However, this study was conducted on longitudinal program data before the foreclosure crisis, so the question remained: Do owners of shared equity homes sustain homeownership, especially during a market bust?
  • In order to examine this question, I conducted the largest survey of SEprograms that has been conducted to date. The sample focused in on one form of SEH, community land trusts. And I asked these CLTs to report on the mortgage loan performance of their homeowners in two separate surveys for 2009 and 2010, and the National CLT Network had similar data from a survey in 2008. Next, I compared the rates of delinquencies and foreclosures in CLT homeowners to the rates of homeowners in the conventional markets as reported by the Mortgage Bankers Association. The MBA data represents roughly 80% of all home loans in the market.However, it’s important to recognize the CLT loans are held by lower income borrowers—who are much more likely to be delinquent and foreclose, while the MBA data reports the loans of borrowers across all income levels. Hence the findings I’m about to present would have been even more robust if I was able to isolate lower income borrowers in the MBA sample.
  • In order to examine this question, I conducted the largest survey of SEprograms that has been conducted to date. The sample focused in on one form of SEH, community land trusts. And I asked these CLTs to report on the mortgage loan performance of their homeowners in two separate surveys for 2009 and 2010, and the National CLT Network had similar data from a survey in 2008. Next, I compared the rates of delinquencies and foreclosures in CLT homeowners to the rates of homeowners in the conventional markets as reported by the Mortgage Bankers Association. The MBA data represents roughly 80% of all home loans in the market.However, it’s important to recognize the CLT loans are held by lower income borrowers—who are much more likely to be delinquent and foreclose, while the MBA data reports the loans of borrowers across all income levels. Hence the findings I’m about to present would have been even more robust if I was able to isolate lower income borrowers in the MBA sample.
  • And when you examine these rates by loan type in the MBA data, the results remain impressive. As you can see here, CLT loans were still outperforming VA loans, which have very stringent underwriting criteria and FHA loans, and prime loans…not just subprime loans.
  • And when you examine these rates by loan type in the MBA data, the results remain impressive. As you can see here, CLT loans were still outperforming VA loans, which have very stringent underwriting criteria and FHA loans, and prime loans…not just subprime loans.
  • And when you examine these rates by loan type in the MBA data, the results remain impressive. As you can see here, CLT loans were still outperforming VA loans, which have very stringent underwriting criteria and FHA loans, and prime loans…not just subprime loans.
  • Hence this study supported that SEH, or CLTs at least, not only help lower income households enter homeownership but help them to sustain it over time.It also found that the comprehensive services and support that CLTs provide homeowners seemingly really matter to reach these positive outcomes. And lastly, the study implies that perhaps SEH is a way to deliver homeownership more effectively and with positive outcomes for more lower income and minority households than current conventional market options.
  • Emily thaden monday evening outperforming the market

    1. 1. Emily Thaden, Ph.D. Research & Policy Development National CLT Network
    2. 2. HISTORY OF U.S. HOUSING VALUES
    3. 3. FORECLOSURE FILINGS ON U.S. PROPERTIES BY YEAR 1 in 45 housin g units RealtyTrac.com 1 in 45 housin g units
    4. 4. 2009 HOMEOWNERSHIP RATES BY INCOME QUARTILE Economic Policy Institute, 2011
    5. 5. 2004 & 2011 HOMEOWNERSHIP RATES BY INCOME RACE www.infoplease.com
    6. 6. BEFORE THE CRISIS… 1 OF 2 LOW-INCOME OR MINORITY HOUSEHOLDS DO NOT MAINTAIN HOMEOWNERSHIP FOR 5 YEARS
    7. 7. “HOMEOWNERSHIP IS NOT FOR EVERYONE.”
    8. 8. HOMEOWNERSHIP MATTERS Herbert & Belsky, 2008; McCarthy, Van Zandt, & Rohe, 2001 Proportion of Wealth from Homeownership in 2000
    9. 9. “HOMEOWNERSHIP NEEDS TO BE DONE DIFFERENTLY.”
    10. 10. Resale-restricted, owner- occupied housing for lower income households that remains affordable in perpetuity. Montgomery County, MD
    11. 11. 1. Limited Equity Housing Cooperative Capital Manor Coop 102 units, Washington D.C. Single-family homes Albuquerque, NM 2. Community Land Trusts 3. Deed-restricted Housing ProgramsArmstrong Townhomes 102 units, San Francisco THE PRIMARY MODELS OF SHARED EQUITY HOMEOWNERSHIP
    12. 12. 2. Wealth creation for households 1. Increased access to homeownership 3. Permanent affordability of homes (i.e. sustained public investment)
    13. 13. 1. INCREASED ACCESS TO HOMEOWNERSHIP Temkin, Theodos, & Price, 2011
    14. 14. 2. WEALTH CREATION Temkin, Theodos, & Price, 2011
    15. 15. 3. PERMANENT AFFORDABILITY Temkin, Theodos, & Price, 2011 % of Median Income needed for first purchase % of Median Income needed for subsequent purchases
    16. 16. IS HOMEOWNERSHIP SUSTAINED?
    17. 17. CLT Samples Organizatio ns Outstanding Loans 2010 62 3,143 2009 42 2,173 2008 50 1,936 v. MBA loans NATIONAL RESEARCH STUDIES OF COMMUNITY LAND TRUSTS
    18. 18. CLT LOANS OUTPERFORM THE MARKET
    19. 19. CLT LOANS OUTPERFORM ALL LOAN TYPES
    20. 20. STEWARDSHIP MATTERS Policies & Practices Approve home financing Educate pre-& post-purchase Interact with mortgage lenders Intervene in delinquencies Intervene in foreclosures
    21. 21. STEWARDSHIP MATTERS
    22. 22.  Homeownership is entered & sustained  Stewardship matters  CLTs provide a better way to do homeownership IMPLICATIONS
    23. 23. QUESTIONS?

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