Is expanding pathways to homeownership without displacing communities possible?

To produce housing, the long time belief has been the need for external funding that requires purchase of the land. The new ownership then demolishes the pre-existing homes to rebuild with a multifamily, more dense, design.

However, two significant negative effects transpire: the repurchase of the land, resets the price value of new built structures to the current market value of the land. Doing so internalizes the cost of the repurchased land into the new housing units. Because land in high opportunity areas is so expensive, this only exacerbates the problem putting new housing further out of reach. In addition, the original owners who formed the original community, are bought out and may not be to repurchase back into the same neighborhood. This is a fast-track form of gentrification, disguised behind “percentage” defined forms of “lower income” that ultimately are inflated by the new incoming residents. At some point, as wealthier household buy into an area, , households earning $150k might eventually be considered “80%” of the Average median Income (“AMI”) and qualify for lower income housing. However, this dooms these families to perpetual tenancy, never ownership.

Tenants by and large will not invest into a community to the same extent as owners. Why would they? They will not benefit from it in the long run, especially if rents are just pushed higher and higher along the way.

To read the Market Feasibility Report on the Citywide Housing Incentives Program, see here:

Land leases allow multiple owners to partake in the increase in the value of the land and the community together through equity sharing and/or cooperative developments. Tenants are now minority shareholders, who as the land appreciates, also concurrently gain more equity. The “gain” of the land is “share” so that everybody gets to benefit from development, not just a privileged, shrouded small group of investors, many of whom may never set foot on the land on whose homes many families sit.

In addition, land leasing provides the opportunities for the original land owners to NOT sell out. They “rent” their land at a stable price so that the upswing is then shared. In exchange for the lower return, these families maintain the land ownership over a multigenerational horizon. In many communities, multigenerational ownership is already the norm. However, a shared equity approach would equalize the market gain for new families entering the community, without displacing those already there.