T22- Affordable Home Ownership in Canada and Beyond

T22- Affordable Home Ownership in Canada and Beyond

Providing permanently affordable housing in Northwestern Vermont SHARED EQUITY HOME OWNERSHIP

Agenda CHT Snapshot Shared Equity How it works Stewardship Question & Answer Session

CHT Snapshot $300M in assets ~ $10M annual budget $97M in annual development 2,600+ homes- 570 in Shared Equity portfolio 90 Employees

5,000 Residents 6,000 Voting Members

Market Vermont s three northwest counties Population 200,000 Urban, suburban, rural

Shelters for the Homeless and Housing for Persons with Special Needs

Rentals $2,100 apartments $19,000,000 in gross annual rent

New Construction

Mixing Housing and Commercial

Housing Cooperatives

Shared Equity Homes

Security and Mobility

Homeownership 570 homes in SEP portfolio SEP served nearly 1,000 HH 3-County Home Rehab Program Community-wide financial and CHT renter counseling and home education

CHT Shared Equity Homeownership

Program Design Resale Restricted Formula balance return with future affordability Ground Lease or Covenant Appraisal-Based System Require pre-purchase education Income Restricted (up to 100% AM) CHT coordinates sale, enters chain of title

Original Purchase Price New Net Price to Buyer New Appraised Value Recycling of Subsidy Appreciation New Investment (majority of CHT s share of appreciation) Stewardship Fund CHT Fee 25%= seller s Original CHT Investment New Investment (majority of CHT s share of appreciation) Stewardship Fund CHT Fee New Purchase Price Original CHT Investment Seller s Original Net Price Appraised Value at time of Purchase 25%= seller s Seller s Original Net Price Option Price To Seller

Production and Sources Inclusionary Zoning Acquisitions Buyer-initiated Resales Donations- Discounted Sale Conversions Foreclosures City and State Trust funds State Tax Credits Competitive capital grants

Leverage: Residential Finance Total Value First Mortgages $ 97,641,135 Number First Mortgages 970 Unique Lenders 41 Refinance Loans (more than) $ 8,843,701

Benefits to buyers Education and counseling Increased purchasing power Lower up-front and monthly costs Ongoing support and stewardship Stepping stone to market

Lower Income Buyers Access Homeownership Over CHT s 30-year history, for all 990 households: 77% earned less than 80% of median income 29% earned less than 60% of median income Average Income 69% of median income

Build Wealth for CHT Homeowners Rate of Return 2.44 6.29 When reselling, the average CHT homeowner got back his/her initial investment and walked away with a wealth gain of $6,763 Homeowners got a 2.5 times bigger return than if they had invested in the S&P for the same timeframe. S&P Equity

Mobility for CHT Homeowners When homeowners sell where do they go? Other 7% Rent 30% Own 63%

Benefits to Community Retaining access to homeownership locally in hot markets Retaining and recycling public subsidiessaving money Leveraging private dollars- economy Improving housing stock Preserving housing stock- vibrant communities

Preserving Affordability

Hot Market- Supply

Before and After Acquisition/Rehab

Retaining Community Wealth CHT helped 2 ½ X more households CHT cost the public 5 X less money

Enhancing Residential Security Success of first-time homeowners (Reid, 2004) 47% Success of first-time homeowners (Herbert and Belsky, 2008) 50% Success of CHT s first-time homeowners 91%

Resale Process: Seller

Resale Process: Buyer Shared Equity Informational Meeting No other primary residence Application Closing Costs Pre-approval Homebuyer Education & Counseling

Resale Process: Marketing CHT Website & Online Sites Print Advertising Listing Sheets Open House & Showing Marketing

Buyer Selection Purchase & Sale Contract Inspection & Issues Letter Legal Document s Meeting Buyer Selection

Preserving affordability of the homes over time What is Stewardship? Assisting with ongoing maintenance of the homes Backstopping Stewardship the security of tenure with delinquency and foreclosure prevention

Stewardship What happens when a The seller pays 100% of depreciation from the equity they have built in their mortgage property depreciates? CHT lowers the grant to the next buyer Use a Stewardship Fund

Stewardship The seller pays for the rehab What happens when a property needs rehab at 3-way split : Buyer, Seller, CHT resale? Buyer pays a higher net price Use a Stewardship Fund

Stewardship After 990 transactions over 30 years, we ve only lost 3 homes to foreclosure. The owner sells to a new CHT buyer before the foreclosure is complete How CHT deals with Foreclosures CHT purchases the home before the foreclosure is complete CHT purchases the home after the foreclosure is complete

Summary Shared equity homeownership with proper stewardship really expands homeownership access to lower income households It enables them to build wealth and stabilize housing costs It requires public funding and public policies that drive capital and finance to the ptogram BUT it is a great bargain to the public with high returns and demonstrable outcomes

National CLT Network www.cltnetwork.org Champlain Housing Trust www.getahome.org CLT Resource Center Burlington Associates in Community Development LLC www.burlingtonassociates.com