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The gap in affordable housing is wide and getting wider. Rent restrictions on some 200,000 units of so-called affordable housing are set to expire next year alone, growing to 1 million units annually by 2032.
Much of the public discussion around addressing that gap is focused on the creation of new affordable housing, which is important. The theme of this week’s Agents of Impact Call was preservation of affordable housing, both rental and owner-occupied, which is existential.
A whole set of solutions and financing mechanisms has emerged to try to mitigate those risks, including transferring ownership to tenants themselves.
Michael Lohmeier of Impact Community Capital, Ruth Gao of Robert Wood Johnson Foundation, Paul Bradley of Roc USA, Jazmin Segura of Common Counsel Foundation and Devin Culbertson of Grounded Solutions Network joined the call to unpack those solutions.
Deconsolidation
To take on private equity investors and commercial developers, emerging strategies are pooling capital, bulk purchasing and going local to compete on timing and speed.
In the face of private-equity consolidation and raising wealth gaps, “We’ve got to step up and deconsolidate and remove these properties from the speculative real estate market, and get them in the hands of the local community,” said Bradley of Roc USA, which helps mobile home owners form cooperatives to buy the land beneath their homes.
Preserving homeownership
Done right, the mechanisms preserve affordability while creating pathways for intergenerational wealth creation for low-income homeowners. The racial homeownership gap has actually widened in the last 60 years, said Gao.
The Robert Wood Johnson Foundation is putting the preservation of homeownership on the agenda of funders and investors in order to “help families with existing properties to preserve the assets, to unlock and fully utilize the benefits of owning property, and to be able to pass it down to future generations.”
To do that, the foundation is looking for solutions to home repair costs, lack of affordable insurance coverage, foreclosures and the “tangled titles” that often burden heirs’ properties.
Local ownership
A movement of community ownership organizations, including community land trusts, is helping communities buy land and housing to take them out of the competitive market in order to preserve affordability.
Community ownership strategies can “help preserve affordability by lowering barriers of entry for low-income residents,” said Segura of Common Counsel, which is raising an integrated capital fund to help community-led organizations in California buy land and housing to take them out of the competitive market and preserve affordability.
Grounded Network Solutions recently completed the acquisition of a portfolio of 283 affordable units in Minneapolis and will begin transitioning those to ownership by seven community land trusts – and over time to individual owners as well.
The goal: “Capturing not just the stability and the anti-displacement, but capturing wealth-building potential,” said Culbertson. With effective implementation, “owner after owner after owner can be in that place and have the opportunity to live in that community, do it affordably and build wealth.”
Scale and structure
To attract institutional investors, innovative models must find scale and structure, says Lohmeier of Impact Community Capital, which raises capital from the large insurance companies including Allstate, Farmers, Nationwide, Nuveen and Pacific Life to invest to keep rental units affordable.
Says Lohmeier: “We would welcome opportunities to do deals that aren’t traditional rental structures, if we could find the right scale to have it be repeatable.”
Resources shared on The Call
- “Unlocking and preserving broad-based ownership to make housing more affordable” (ImpactAlpha)
- “Podcast: Building institutional-grade strategies to create and preserve affordable housing”(ImpactAlpha)
- “Putting homeownership preservation on philanthropy’s agenda” (SSIR)
- Coalition for Affordable, Cooperative, Mutualist Housing (press release)
- “Court allows partition sale of Bed Stuy home in family for 75 Years” (Brownstoner)
- Past deep dives on housing stability and affordability (Aspen Institute Financial Security Program)
- Future Wealth Initiative (Aspen Institute)
- “A Gathering Storm,” on climate risks to financial security (Aspen Institute)
- “Warren Buffett’s mobile home empire preys on the poor “(The Center for Public integrity)
- “Why housing providers must develop racial intelligence” (National Housing Federation)
- John Oliver segment on mobile homes with a shoutout to ROC USA (YouTube)
- “Meet … Claude Hendrickson: Leading light of community self-build housing” (Coop News)
- “The Price of Equity: This Trenton couple may have the solution to the housing crisis” (The Trenton Journal)
- “Repurposing a free-market model to revive homeownership in Black and Brown communities” (Next City)
- National Association of Affordable Housing Lenders annual Policy and Practice Summit on December 11 (NAAHL)
Some of the Agents of Impact on The Call
Thomas Lopez-Pierre of Black Real Estate Forum… David Lidz of StreetWell and WaterBottle Cooperative… Magdi Amin of African Renaissance Ventures… Noveena Padala, masters candidate of sustainability management at Columbia University… Carlos Rincon of the Federal Reserve Bank of Boston… Sheree Speakman of Talent First PBC… Joy Marie Smith of Common Roots Housing Trust… Diana Bellizzi of Hudson Valley Property Group.
Marcelo Mainzer of EcoVillage Makers District… Delilah Rothenberg, Raphaele Chappe and Shannon Mullins of Predistribution Initiative… Cindy Holler of Community Housing Capital… Curt Lyon of Transform Finance… Jackie Koney of National Coalition for Community Capital… Johann Wong of JouleWatt… Henry Levy, treasurer of Alameda County… George Spencer of Gregory FCA’s Impact Investing & Sustainable Finance… Kim Griffin of Pluralize Capital.
Eli Enenbach of Robert Wood Johnson Foundation… Sam Chesser of Self-Help… Claude Hendrickson of Community Led Homes… Fred Scott of Red Stone Equity Partners… Karyn Polak of Shift the Prism Advisory… Doug Kiester of Mable Software… Jeremy Kohomban ofThe Children’s Village and Harlem Dowling New York… Jeff Malin, consultant… Clint McCoy of GoodRoots… Hala Farid of Texas Community Capital… Katherine Selch of Citi Community Capital.
Blair Smith of Milken Institute… Michael Peck of Coalition for Affordable, Cooperative, Mutualist Housing… Ida Rademacher of Aspen Institute Financial Security Program… Tori Tavormina of Texas Housers… Doug Schaeffer of Allivate Impact Capital.
Robert Wood Johnson Foundation supports ImpactAlpha’s homeownership preservation coverage.
