Shared Equity Homeownership Evaluation: Case Study of Northern Communities Land Trust

Abstract

Shared equity homeownership initiatives provide below-market homeownership opportunities to income-eligible families in return for a share of the owner's potential capital gains at resale. This case study analyzes affordability, personal wealth, security of tenure, and mobility outcomes for the Northern Communities Land Trust (NCLT), which operates in Duluth, MN. NCLT owners realized high returns, but resold homes saw a modest decrease in affordability over time. Foreclosure rates for NCLT homes are below the area's already-low average. And even though nearly all NCLT buyers were first-time homeowners, most resellers are able to purchase market-rate homes when leaving the program.

The text below is an excerpt from the complete document. Read the full report in PDF format.

Introduction

This case study analyzes outcomes for the Northern Communities Land Trust (NCLT) in Duluth, Minnesota. Incorporated in 1990, NCLT began producing affordably priced homes for sale to low- and moderate-income families in 1994. Through December 2009, NCLT had sold homes to 232 families. Included in this total were 47 resales, where the same price-restricted home was successively purchased by more than one income-eligible family. Using client-level data provided by NCLT, in the following sections we present analyses that address the following four research topics:

1. Affordability: Is the program effective in creating and preserving affordability for low- and/or moderate-income homebuyers?
2. Personal Wealth: Is the program effective in building wealth for individual households, providing opportunities for financial gains that are unavailable to renters?
3. Security of Tenure: Is the program effective in maintaining high levels of owner-occupancy for its participants?
4. Mobility: Are program participants able to sell their shared-equity homes and move into other housing and neighborhoods of their choice?

In the following section we describe NCLT's program, including the method it uses to calculate the allowable amount of appreciation that can be realized by resellers and the amount of capital investment that can be recaptured by resellers.

End of excerpt. The full report is available in PDF format.)

• Related Research

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org.

If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.