Shared equity housing program helps low-income families afford homes

by Candyd Mendoza16 May 2019

More low-income households are finding shared-equity homeownership affordable, according to a study from the Lincoln Institute of Land Policy.

Lincoln Institute partnered with Grounded Solutions Network to conduct the largest research of shared-equity homeownership to date. The study evaluated the performance of more than 4,000 housing units across 20 states over 30 years. 

After measuring the impact of the shared-equity housing sector, the study found that 95% of shared-equity mortgages were affordable for households earning 50% to 80% of area median income.

The shared-equity housing model enables lower-income residents to either directly or indirectly own a home at a lower cost than the open-market rate. When residents put a shared-equity home up for sale, they get a part of the gains, and a portion remains with the property. This model provides a perpetual subsidy and enables others to buy the same home at below-market price.

"Shared-equity housing programs maximize a one-time public investment to achieve homeownership for families who would otherwise be unable to afford a traditional market-rate home," said Grounded Solutions Chief Executive Officer Tony Pickett. "We are expanding equitable housing choices and creating new avenues for lasting affordability, resulting in the use of public assets for public benefits that serve families in perpetuity."

"Shared-equity programs unlock stable housing opportunities and provide a foothold for people who would not otherwise be able to access homeownership, one of the main wealth-building vehicles in the United States," said George McCarthy, president of the Lincoln Institute of Land Policy.

In addition, the findings also revealed that the share of minority households living in shared-equity homes rose to 43% between 2013-2018 from 13% between 1985-2000.

"Shared-equity home ownership provides opportunities for families of color to access quality housing, build wealth, and counter systemic racial housing disparities," Pickett said. "We believe this study validates shared equity as a sustainable housing model, and our focus is on growing the scale of shared-equity housing to a level where increased numbers of lower-income families view it as something they can participate in and benefit from."