1. Stewardship for Lasting Affordability
Administration and Monitoring of Shared Equity Homeownership
Rick Jacobus
Burlington Associates in Community Development
14. Municipality
Shared Equity
Ownership Units
Estimated staffing
(FTEs)
Est. Units/FTE
Somerville, MA 41 2.5 16.4
Lafayette, CO 70 0.75 93.3
West Sacramento, CA 80 3 26.7
Palo Alto, CA 169 1.25 135.2
Housing Assistance Council of
Cape Cod
250 0.25 1000.0
Boston, MA 400 3 133.3
Santa Barbara, CA 453 1 453.0
Bedminster Township, NJ 680
1
680.0
Denver, CO 700 1 700.0
Fairfax County, VA 1400 3 466.7
Montgomery County, MD 1976 6 329.3
NJ Housing and Mortgage
Finance Agency
5000 10 500.0
16. Common Revenue Sources
• Local Government General Funds
• Local Housing Funds
• Application Fees
• Refinance Fees
• Marketing Fees from Developers
• Resale Fees from Homeowners
• Admin Fees/Ground Rent
• Grants/Fundraising
18. Marketing Fees
• Workforce Housing Association of Truckee Tahoe
– 3% of Affordable Sales Price
• Housing Land Trust of Sonoma County
– $7,000 per unit
• City of Somerville, MA
– $2,500 per unit
Traditional Realtor Commission = 6% of price
Charged to Developers at Initial Sale
19. Resale Fees
• Palo Alto
– included in annual fee for service contract with City
• Tri Valley Housing Opportunity Center
– $1,000 per sale (no marketing)
• Santa Clara, CA -NHS
– ~$10,000 per sale (with marketing)
• State of New Jersey
– 3% of Affordable Sales Price (with marketing)
– 1.25% of Affordable Sale Price (without marketing)
Charged to Homeowners at Sale
20. Admin Fees
• Community Land Trust Ground Lease Fees
– $20 - $100 per unit per month
• City of Chicago/Chicago CLT
– “Covenant Fee” $25 per unit per month
• Urban Homesteading Assistance Board
– Co-op Monitoring Fee $1,500 – 4,500 per
co-op building per year
Charged to Residents Monthly/Annually
22. Sample Program Costs
Palo Alto - PAHC
– $140,000/ 169 units ($828/unit)
• San Jose - NHS
– $60,000/~ 125 units (~$500/unit)
• Montgomery County, MD
– $400,000/1,976 units ($202/Unit)
23. Stewardship Costs
• We don’t have enough information to know
what the right range of costs should be!
• Many programs are very significantly under
funded
• Costs per unit seem to drop with volume
(ie. There are significant economies of
scale)
• Costs seem to increase with subsidy levels
24. Stewardship Costs
High Cost Lower Cost
Market House Price 500,000$ 250,000$
Average Affordable House Price 325,000$ 150,000$
Value in Trust 175,000$ 100,000$
Budget for 300 Unit Program 240,000$ 135,000$
Stewardship Cost Per Unit 800$ 450$
Cost as % of Value in Trust 0.46% 0.45%
*Hypothetical values only
Relative to “Value in Trust”
Policymakers, like virtually everyone else in America, generally have romantic ideas about homeownership. People take it for granted that homeownership is desirable and rarely get past vague references to the power of the American dream. But if we are going to make promoting and even subsidizing homeownership a public priority, we need to spend some time thinking a little harder about why.
Are we trying to provide shelter?
Is it about offering kids a safer place to grow up?
Is this an economic development strategy?
Or is it about reducing traffic by allowing the workforce to live closer to the jobs?
So it makes sense that we have an interest in promoting ownership – even if is is more expensive than rental housing.
Homeownership is not functioning in the way that it has in the past.
the very success of homeownership as an investment has made it an unattainable dream for more and more people.
For all its benefits, homeownership is probably oversold as a strategy for lower income families.
Policymakers should be careful not to simply assume that homeownership will automatically result in asset building for lower income buyers.
We can design programs that greatly improve the odds. And the first step in that process is ensuring that lower income buyers have homes that can actually afford.