Hungry for affordable housing, communities turn to land trusts

New data from the 2023 American Community Survey found that nearly half of the nation’s 42.5 million renter households are “cost-burdened,” having spent more than 30% of their income on housing costs last year. So, it comes as little surprise that a model promising permanently affordable housing is gaining traction.

Community land trusts and their shared equity homeownership programs increased 30% to more than 300 nationwide between 2011 and 2022, according to a report last year from the Lincoln Institute of Land Policy and Ground Solutions Network, a nonprofit that promotes programs and policies that create long-term affordable housing.

Community land trusts are far from new—dating all the way back to the late 1960s—but the old-school model has been garnering renewed attention in recent years, said James Yelen, director of technical assistance for Grounded Solutions Network.

Land trusts are nonprofits that through a shared equity program purchase properties and then sell or rent the single-family homes, multifamily buildings or commercial spaces built on them. The trust retains ownership of the land the house sits on. Because the homeowner is only paying for the house itself and not the land, the cost of the home is reduced. The two parties enter a long-term lease—typically 99 years—and if the homeowner ever decides to sell, they agree to sell to another low-income family at a restricted price.

“I think that there is more interest in this idea of community ownership, more demand for it in both social movement spaces as well as increasingly in public opinion,” Yelen said. A community land trust is a community-centered organization and is governed by a board of participating homeowners, community members and public stakeholders like public officials or nonprofit representatives. 

Shared equity programs are especially helpful for first-time buyers. Amid the housing crisis, true starter homes are exceptionally difficult to come by, but community land trusts can provide an option for young households looking to earn equity. That’s what the Champlain Housing Trust in Northwest Vermont is hoping to achieve with its program—to help provide a stepping stone for hundreds of new homeowners.

“We see the vast majority of our folks go on to other forms of home ownership,” said Michael Monte, the trust’s executive director. “[They] use the lower cost of the shared equity model, plus the equity they earn by reducing their principal or by having a lower mortgage cost … and they use all of that as leverage for a private-market home.”

Nationwide, nearly 88% of people who own their homes through a shared equity program are first-time buyers, according to Grounded Solutions Network. The model offers social benefits too, like mitigating gentrification and reducing racial gaps in homeownership. 

States like California, New York and Washington have high concentrations of community land trusts, likely because they have some of the highest housing costs in the country and residents have pushed for the model, Yelen said. California alone has more than 40 community land trusts, but there’s also growing excitement around shared equity housing in places like Florida, Texas and across the Midwest, he added.

This is in part because community land trusts have emerged in these states as a key tool in warding off so-called disaster gentrification. After being hit by hurricanes, Houston and the Florida Keys both turned to trusts to buy properties so they could keep them affordable and available to local residents. After last year’s wildfires, some community members in Lahaina set up a land trust as well. 

The shared equity model also solves the time-limited affordability requirements often tied to affordable housing. Millions of affordable units are created with the help of benefits like the low income housing tax credit, which requires subsidized units to remain affordable for a set period of time, often 30 years. But when those 30 years are up, those units can become market-rate. Affordability restrictions for nearly 330,000 units will expire by 2026, according to the National Housing Preservation Database. 

“Even as you create new [units], you're losing the existing ones,” said Monte of the Champlain Housing Trust. “That means you're never really gaining any ground.”

In the late 1980s, Vermont sought to rectify this by requiring all subsidized housing be permanently affordable for low-income residents. That policy has helped create an environment that aligns with the goals of community land trusts and ensures that “public investment would always remain a public asset,” Monte said. 

The state’s commitment to permanently affordable housing has helped the Champlain Housing Trust grow substantially over the last few decades. Plus, at the local level, Burlington made an initial investment of $200,000 to create the trust in 1984. These state and local investments have been key in growing the Champlain Housing Trust. It now offers several programs outside the shared equity model, including permanent supportive housing and a variety of loan products. 

For most of the country, however, scaling community land trusts to serve more people remains a significant challenge, Yelen said. Shared equity homeownership accounts for a small fraction of total homeownership in the U.S.—about 13,000 homes nationwide in 2022. The costs of land and construction are still high, plus the additional expenses tied to property and asset management can be difficult for small nonprofits to navigate. 

One of the best ways local governments can support shared equity programs is by carving out dedicated funding, Yelen said. That’s what Oakland, California, has done with its Acquisitions and Conversion to Affordable Housing program, which involves setting aside funding for community land trusts and cooperatives. Similarly, Chicago’s Shared Equity Investment program provides funding for shared equity housing programs. 

Beyond dedicated funding, state and local governments can update laws to ensure community land trusts are eligible for affordable housing funding from programs like the federal Community Development Block Grant.

Adjusting property taxes can also be key in supporting shared equity programs, Yelen said. In California, for instance, a 2019 law exempts community land trusts from property taxes from the time the trust acquires a property until the home is bought. In Vermont, tax assessors recognize that a shared equity household does not own the full property their home sits on, and their property taxes are adjusted accordingly, Monte said. 

Despite the renewed attention, Yelen cautions that shared equity programs will be slow to take off in any significant way without an infusion of federal, state and local dollars complemented by some policy changes. 

“[Community land trusts] provide a path for residents to build some wealth, if not the kind of generational game-changing wealth that comes from market-rate ownership, but still something very significant,” he said. “They just need the resources and the conditions to actually implement the model at scale and to do it in a way that's going to create a meaningful impact on the housing market.”

Editor's note: This story was updated to correct the name of the Lincoln Institute of Land Policy.