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203 6 Filling the Void between Homeownership and Rental Housing: A Case for Expanding the Use of Shared Equity Homeownership jeffrey lubell Most discussions about expanding access to homeownership take as a given that we know exactly what homeownership is. The questions then usually fall into a predictable pattern: What are the risks and benefits of homeownership ? How might it be expanded, and what are the costs and benefits of the different options for doing so? How can positive homeownership outcomes (for example, use of homeownership to access better neighborhoods) be maximized while minimizing negative ones (for example, foreclosure)? But what if we were to take a step back and reexamine the definition and scope of the end goal itself? As others have observed, there is a lot of room in between the extremes of “rental housing” and “homeownership.”1 By considering alternative configurations of the bundle of attributes that make up the traditional definition of homeownership, we can open up new options for informing the policy debate and potentially develop new and more cost-effective approaches for advancing key societal goals. Following some initial reflections on the definition of homeownership, this chapter focuses on a set of policy options that fall in between the traditional tenure options of rental housing and homeownership and are sometimes referred to At the time of writing, the author was executive director of the Center for Housing Policy. 1. See, for example, Apgar (2004). 204 jeffrey lubell collectively as “shared equity homeownership.”2 As I use the term, shared equity homeownership (SEH) is a tenure choice that provides most of the benefits of homeownership at a lower price point, facilitating access to homeownership by low- and moderate-income households. Under SEH home price appreciation is shared between the homebuyer and the program sponsor to achieve a balance between the individual’s interest in building wealth and the community’s interest in ensuring long-term affordability.3 Specific policy options for implementing SEH include community land trusts, limited equity cooperatives, deed restrictions , and shared appreciation loans. The benefits of SEH go beyond initial affordability. When implemented effectively , SEH can reduce many of the risks of traditional homeownership, providing a safer and more sustainable housing option for low- and moderate-income households while still allowing sizable opportunities for households to build wealth. SEH also provides a mechanism for preserving the buying power of government and philanthropic investments in the face of rising home prices, allowing a single investment to help one generation of homebuyers after another. Because it can be used to assure long-term affordability of specific units, SEH also has an important role to play in helping to ensure that families of all incomes can afford to live in gentrifying areas near public transit stations, job centers, and effective schools. I am acutely aware of the risks involved in asserting such sweeping benefits for a little-known and sparingly used tenure choice. It is justifiable to be skeptical of things that sound “too good to be true.” But this is one time when I believe the case is so compelling that the field needs to be open to shifting its paradigms to accommodate it. There are certainly limitations to SEH—particularly challenges with scaling up and the potential for confusion among homebuyers. But I believe the policy case overwhelmingly favors greater use of these tools, particularly in cases where sizable public subsidies for homeownership are already being provided directly (for example, through grants or forgivable loans) or implicitly 2. It is important to note that “shared equity homeownership” is a term that has been superimposed upon a diverse landscape of alternative tenure options rather than one that grew organically from the field. Many practitioners of what I call SEH do not necessarily use or endorse this term, and as subsequently discussed, there are differences of opinion about which programs fall within SEH. Despite these issues, I find the term useful for categorizing a diverse set of programs that share related goals and can be used to produce similar outcomes. Most important, the programs that fit this definition provide a suite of benefits that, in my view, compare favorably with traditional homeownership and merit greater attention and investment. 3. Shared equity homeownership programs can help advance other individual and community goals, but their salient characteristic is a balance between individual wealth accumulation and long-term affordability. Other individual benefits...

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