Bramson: Shared equity at home

It’s no secret that homeownership has been a challenge, if not an impossibility, for many poor people for a long time in this valley.

From the redlining of the 1930s to the current day attempts of the federal government to dismantle the protections of the Fair Housing Act, we continue to take actions that limit permanent housing opportunities for the most vulnerable families in our community at every turn.

And make no mistake, the benefits of owning a home are many: tax advantages and deductions, wealth and credit building, stable monthly payments, and the freedom to make decisions with an asset that can benefit you and your family for generations to come. But with the average median home price hovering just around $1 million in San Jose and about 10% of the population living below the poverty line, it’s hard to see a clear path ahead for most folks who are struggling just to pay their bills each month.

That said, opportunities do exist. Resident-owned mobile home cooperatives are a great example of how shared ownership of a site can lead to significant benefits for the community as a whole. In these co-ops, everyone has a stake in the upkeep and maintenance of the community and owns their home, allowing them to financially benefit as the land appreciates in value over time. Costs are controlled for the residents by limited equity partnerships, where a nonprofit or government agency steps in to fill the gap between what a bank will lend and what homeowners can afford.

While these arrangements are currently limited to about 2% of all mobile home communities nationally, San Jose seems like a prime place to explore this opportunity further, with thousands of extremely low-income and aging residents already facing an uncertain future living in commercially-owned parks. In other parts of the country, organizations like the New Hampshire Community Loan Fund have already demonstrated the effectiveness of this approach, having supported thousands of families with the creation of such affordable communities.

Given the population growth that we’re seeing locally and the correlating demand for increased density, though, it’s important to think about how this might work in other multifamily housing settings, as well. While our primary solution locally has focused mainly on building more deeply affordable housing and thereby getting the rents down for people – a hard-fought effort that still has a long way to go – that can’t and shouldn’t be the end of the road.

Recently, a group of architectural students at Yale took this notion to heart, winning a U.S. Department of Housing and Urban Development (HUD) affordable housing design competition by utilizing shared ownership principles in their concept modeling. In this structure, project financing would initially come from traditional tax credit funding for the first 15 years, but residents could buy equity in the development over that time. At the end of the period, the building would convert to a co-op owned by the residents who choose to participate. Though very much untested, the award from HUD seems to suggest some promise in the future.

Regardless of what we do, it’s clear that housing equity means that everyone needs to have access to a slice of the pie, if they want it. And, despite notions to the contrary, there seems to be some solutions already out there to help make sure homeownership doesn’t continue to be another dream denied.

San José Spotlight columnist Ray Bramson is the Chief Impact Officer at Destination: Home, a nonprofit that works to end homelessness in Silicon Valley. His columns appear every second Monday of the month. Contact Ray at [email protected] or follow @rbramson on Twitter.