Seattle program makes homes affordable in a pricey market. Is it a model for Charlotte?

Seattle program makes homes affordable in a pricey market. Is it a model for Charlotte?
A community land trust is a nonprofit that owns the land where people buy affordable homes. To combat Charlotte's affordable housing crisis, here's what Charlotte can learn from Seattle. BY STEPHANIE BUNAO | JOVELLE TAMAYO

SEATTLE (Lauren Lindstrom/Charlotte Observer) - Susan Zeman and Bob Downing immediately found a lot to love about their two-bedroom townhouse in Seattle’s Columbia City neighborhood.

They loved that they could stay in the same community where they’d lived for years and formed close ties.

She loved that they could adopt a dog, difficult in cramped rentals. He loved that he wouldn’t have to mow a lawn again.

And, unlike many house hunters in one of the costliest real estate markets in the country, they loved the price.

The couple bought the home in 2016 through the Homestead Community Land Trust, which offers affordable home ownership in Seattle and the rest of King County, Washington.

Community land trusts promise “permanently affordable housing,” an alluring concept in cities like Seattle where rents and home prices are well above the national average. It separates ownership of the structure and land beneath it; residents purchase the home while the land trust owns the land and leases it back for a monthly fee.

“I feel like I can breathe easy in a way that I couldn’t before,” Zeman, a nurse at a local hospital, said of being a homeowner.

She reflected on years of watching their rent increase. Their last place before buying with Homestead was an 800-square-foot, one-bedroom backyard cottage, where they carved out space for their now 15-year-old daughter by dividing the living room with bookshelves.

“I don’t know at what point we would have finally had to throw in the towel,” Zeman said.

There are at least 225 community land trusts in the United States, according to the Grounded Solutions Network. Specific models, funding sources and practices vary. Land trusts buy existing single-family homes or build new ones. Some also have affordable rental units in their portfolios.

Buyers’ costs can be reduced 30% by removing the land costs and further subsidizing the purchase with a combination of public and private funding, Homestead officials said. Buyers sign a 30-year, fixed-rate mortgage with a lender to work out the intricate agreement with the land trust.

Zeman and Downing’s $210,000 share of the purchase price is substantially more affordable than nearby similarly sized townhouses, which sell on the open market for $600,000 to $700,000.

HOW LAND TRUSTS WORK

Proponents say community land trusts make buying a house possible for moderate income households, minority buyers and others who have been historically excluded from homeownership. The programs also create a stock of permanently affordable housing and stabilize neighborhoods threatened by gentrification.

Homeownership is one of the most reliable ways to build generational wealth in the United States, but housing costs continue to outpace earnings in cities like Seattle.

Median household income in the city was $93,500 last year, according to Census data. The median single-family home sale in King County was $660,000 in October.

That gap between wages and housing costs is one reason land trust proponents say there needs to be a way to ensure long-term affordability as land and home prices continue to climb.

“In Seattle we have seen the acceleration of real estate price since the recession,” said Kathleen Hosfeld, Homestead’s executive director. “It’s just been rocketing skyward.”

Similar, though less extreme price increases are happening in the Charlotte region, where the median income is $79,000 and the median home sales price was $265,000 in July. Charlotte’s West Side Community Land Trust, formed in 2017, joins a growing group of land trusts nationwide working to address the country’s affordable housing crisis.

Among the most prominent examples is the Champlain Housing Trust in Burlington, Vermont. In 1984, then-Mayor Bernie Sanders helped secure $200,000 in city funding to get the fledgling nonprofit started. Today, it has grown to more than 600 owner-occupied homes and 2,400 affordable rental units across three counties.

The concept has had its skeptics over the years, said Chris Donnelly, director of community relations for the Champlain Housing Trust, including wary financial institutions, real estate agents who worried they would be cut out of homes sales and people opposed to spending taxpayer money. Donnelly said their decades of work has eased those concerns.

“At the core, it’s not really about the housing that we create, it’s about the durability of our commitment,” he said. “Forever is a long time.”

Homestead began in 1992 with residents who saw Seattle gentrifying. The first homeowner, a librarian who still lives in the house, came a decade later. Today there are more than 200 homes in the portfolio.

Hosfeld called the first decade “a tough slog.”

“People, I think, were suspicious of this (model). You hear the term ‘socialist’ bandied about. I think people just thought this was socialism,” she said. “I think it’s social entrepreneurship. We’re solving a community problem with a partially market-based solution.”

SUCCESSES AND LIMITATIONS

Even the most robust land trusts like in Burlington have several hundred to a few thousand units in their portfolios, not nearly enough supply to meet the increasing demand for affordable housing. Leaders say land trusts can’t — and shouldn’t — be the only affordable housing solution.

Homestead leaders have had to respond to a changing market, Hosfeld said. When prices increased to the point that buying single-family homes on the open market became unfeasible, they shifted to building their own through ongoing partnerships with area developers and municipalities.

Hosfeld calls land trusts “one tool in the tool belt” in a larger affordable housing conversation that often focuses on renters.

Public funding is crucial to many land trusts’ success, their leaders say.

In addition to early seed money from the city of Burlington, the land trust receives ongoing state and local funding, Donnelly said. Several allocations, including from property taxes and a portion of every property sale in the state, go toward affordable housing efforts in Vermont.

It’s meant that low- and moderate-income households working in Burlington can continue to live there. Minority homeowners and renters make up about a quarter of the land trust’s residents, Donnelly said. It’s a more diverse share than the Vermont population overall, which is more than 90% white.

“I can’t imagine what it would look like if we hadn’t done what was done,” he said of the land trust’s work. “We remind people that the folks that are living in this housing add a tremendous amount of value to our communities.”

‘EVERYTHING WAS A FINANCIAL STRUGGLE’

Eli Kaufman, 42, and Jeppa Hall, 44, bought their three-bedroom home through Homestead in the southern suburb of Burien, just west of Seattle-Tacoma International Airport.

They’d been renting in Seattle since each moved here in the 1990s and watched their rent steadily rise. The couple was spending upward of half of their income on housing, the federal definition of “severely cost-burdened.”

“I was under a lot of stress in the several years preceding this (home purchase),” Kaufman said. “After we had a child and I was in school, everything was a financial struggle…. For five or six years, I didn’t get a good night’s sleep. That’s huge.”

Increasing housing costs forced the couple to consider leaving the city for somewhere more affordable, which meant also leaving their work, families and community. Before they were approved for the Burien home, owning seemed permanently out of reach for Kaufman, who works in prosthetic research, Hall, who is an artist, and their 9-year-old daughter.

Kaufman said they knew their best financial decision was to “bite the bullet” and buy a house rather than continue to pay rent that doesn’t build equity, but said they could never come up with enough for a down payment before they joined the land trust.

The couple purchased the 1940s three-bedroom home from a previous land trust participant, who had owned it since 2010. That transfer of affordable ownership shows the land trust at work, officials say.

Homestead owners accrue 1.5% equity in the home, compounded annually. That means in a surging housing market, land trust participants can’t cash in like their neighbors when they sell.

But, land trust supporters say, many who buy through the program would be locked out of home ownership entirely without some kind of affordable option. Sales go through the land trust. Homeowners who sell get the agreed appreciated home value, and the land trust selects another income qualified resident to buy.

“What we hope for our folks is that they will build wealth while they own a community land trust home and that they will then use that wealth once they leave our programs to continue to thrive,” Hosfeld said. “That might mean market rate homeownership. It might mean going back to school to get another degree or get their first degree. It might mean putting a child through college. Any of those outcomes would be a great.”

Kaufman said the program made financial sense and aligned with their values.

“We like that we could buy a house...that was totally reasonably priced and it would stay affordable for the next person,” he said. “The speculative market is really, from what I can tell is, is a huge part of why we’re having a housing crisis in the first place. So, we felt really good about not contributing to that at all.”

This story was produced by the Charlotte Journalism Collaborative, a partnership of six media companies working together in an effort started by the Solutions Journalism Network and funded by The Knight Foundation. This work was made possible in part by grant funding from Report for America/GroundTruth Project and the Foundation For The Carolinas.