Homestead Community Land Trust News

Letter from Sheldon Cooper, HCLT's Executive Director

By Sheldon Cooper

These are interesting times. It seems that every week there is an article in the paper that showcases a personal struggle to acquire affordable housing. Behind these individual stories are some daunting numbers. According to the Housing Development Consortium, King County will need 155,000 more affordable homes by 2015 to meet local need. The nonprofit sector, working at current capacity with funding that keeps pace with inflation, will only be able to meet about 17% of that need. The for-profit sector has largely walked away from building affordable homes. Clearly we won’t meet our affordable housing needs with business as usual. We need bold new approaches if we are going to adequately house all of us.

One powerful new approach currently within Seattle’s reach is Incentive Zoning. These policies would require that all housing developers include affordable units in their developments, in exchange for increased zoning density. Seattle will grow denser to accommodate its share of regional growth, support vibrant pedestrian oriented business districts and public transit, and limit sprawl. Incentive Zoning would assure that this growth will include housing affordable to a diversity of income levels including modest income households otherwise not served by the marketplace. Requiring developers to provide affordable units in exchange for the ability to build bigger projects could generate large numbers of affordable homes per year at no public cost. If all these homes were then required to remain permanently affordable, so that many generations could benefit from this resource, Seattle and the region would begin to gain real traction on its affordable housing deficit.

In order to build up a stock of permanently affordable homes that is relevant to the demonstrated need in Seattle, HCLT is working hard to increase the pace at which it brings homes into the land trust. We are expanding our partnership with Habitat for Humanity, pursuing partnerships with other nonprofit and for profit housing developers, and working with the Housing Development Consortium to help advance Incentive Zoning in Seattle. With such an array of efforts on our plate, 2007 is shaping up to be an interesting (and very busy) year for HCLT.

Homestead Community Land Trust expands options to include condos

By Clara Berridge

Bellingham’s Kulshan Community Land Trust was the first of the ten community land trusts in Washington State to make condominium ownership an alternative affordable option to single family homes. As of January 2007, Seattle’s Homestead Community Land Trust is the second!

Affordable condominium ownership is good news for Seattle; it’s an appealing option according to individuals for whom home upkeep and yard maintenance is a major deterrent for owning. And, with County homes within reasonable reach only for households earning $115,000 or more, land trusted condos are designed to help fill a giant gap of affordability. The median King County home is $435,000, while the median condo goes for $264,900.* This difference of over 170 grand makes a huge difference. In fact, that difference is nearly the amount of money the median-earning household falls short of affording a single-family home.

Another reason HCLT’s new role as steward of condos is good news for Seattle is because condos are quickly losing their status as an affordable option; in 2006, the rise in condo prices was sharper than that of houses. Now is the time to get those condos into the land trust before soaring prices cut more people out of the market – even despite the help of Homestead.

So how can a community land trust incorporate a single condominium unit? Under the legal arrangement HCLT has for single-family homes, the land the house sits on is owned by the CLT and leased to the homeowner. The lease agreement specifies that the home must be occupied by the homeowner and if and when the time comes, sold according to a formula that ensures perpetual affordability. For a land trust condo owner, these specifications don’t change, only the legal tool used to enforce them. Because the land trust doesn’t own a physical piece of property, the condo is stewarded through an affordability covenant. Thus, a condo that costs $250,000 on the market today will be can be purchased by an individual or family who can afford approximately $160,000, as HCLT brings $90,000 in purchase assistance. In ten years if the owner decides to sell, according to the resale formula, the seller would gain about $75,000 in equity while a new buyer would save approximately 58% over the (anticipated future) market rate.

Homestead Community Land Trust was lucky to be able to borrow legal documents prepared by the Kulshan CLT for their own condo agreements and tweak them to fit Seattle. This type of support between CLTs is fostered by the NW Community Land Trust Coalition, connecting CLTs of the Pacific NW through a shared mission to provide for affordable resident- and community-controlled land and housing in perpetuity. The coalition is just the mechanism to connect creative juices as CLTs look for more innovative ways to offer solutions to a housing crisis that touches all of us and prevents thousands of working people from investing in their communities through owning.

*Source: NW Multiple Listing Service as cited in P-I article Aug 8, 2006

2006 Fall fundraising campaign a success

HCLT’s fall fundraising campaign was a great success! When the dust settled, 52 individuals had pledged a total of $11,320 to HCLT with employer matches contributing another $3,100. On top of that, Homestreet Bank honored HCLT with a Community Housing Award and $10,000 contribution and the Washington Mutual Foundation also contributed $10,000 to HCLT’s year end effort! Thank you all very much!

Individual contributors:

$1000 and above
Will Kemper (COHO group of Windermere Agents)
Jay Lapin
Scott Nodland
Gale Picker

$500 - $999
Paula Mahoney
Darryl Smith
Quinnie Tan

$250 - $499
Becky Andrews
Rhonda Busby
Sheldon Cooper
Cheryl Ford
Mary Hausladen
Megan Hyla
Dove John
David Lee
Jenna Smith
Larry Sol (Windfall Winery)

$100 - $249
Brian Allen
Mike Beebe
Fred Corbit
Margaret Curry
Peter Graff
Ben Kaufman (GreenWorks Realty)
Bill and Patty Lavelle
Carmelita Logerwell
Ryan Maxwell
Peter Nevin
Philippa Nye
Randy Robinson

Up to $99
Hester Angus
Bob Antieau
Kathleen Baginski
Christina Bonfield
Deborah Bowler
Greg Beutel
Jimmy Budiman
Ayana Carroll
Marc Cote and Sea Gabriel
Jokhanah Ennes
Tonya Hennen
Karin Landsberg
Jim Lietz
Craig Lorch
Anita Manuel
Michele McCauley
Scott McClay and Lisa Morrow
Maggie McKenna
Emily Paddison
Lisa and Larry Pascual
Glenn and Tamar Puckett
Melissa Ropke and Geov Parrish
Janna Wachter
Romelia Yax

HCLT Homeowner Story: Analia and Len

By Analia Castanos and Len Davis

We spent much of 2006 thinking about, talking about, and looking at houses. Based on our limited incomes, we knew that it would be hard to find anything we could afford within the Seattle city limits.

Sometime in the spring, a friend told us about HCLT.  At first, not really understanding the concept and assuming that it somehow limited what it meant to be homeowners, we dismissed the whole land trust model as something that wouldn’t work for us. Originally it was the inability to afford a traditional mortgage that lead us to look deeper at buying a home through Homestead, but the more we learned about it, the better it sounded. The combination of the down payment assistance raising our buying power and making possible an affordable mortgage sealed the deal. It did take us what felt like forever to make sure our non-traditional incomes were able to fit the rigid criteria for income qualification, but the wait was well worth it.

After seeing many homes that were either too small or just a total mess in need of much more than TLC, we lucked into a wonderful little house in Rainier Beach. The previous owners had worked hard on creating an oasis here with a beautiful garden, and we look forward to picking up where they left off.

Living in a valley created by the nearby powerlines, it’s uphill in both directions from our driveway and our car was snowed in for a week recently. It seemed like our neighborhood had snow and ice everywhere for days after it had melted or been cleared away across the rest of the city. Our neighborhood is in transition with a developer building 3 new homes directly across the street from ours, so we will see what the future brings.

We are both building our own small businesses and look forward to having our awesome new home as our base. Thanks to Homestead for making it possible and we look forward to spreading the word so that other young creative folks who choose nontraditional careers and can’t afford outrageous Seattle home prices CAN actually become homeowners.

We are very happy to welcome Analia and Len as the 11th HCLT homeowner family. Also, check out Len's business keeping track of Seattle's history at: www.livehistory.net

 

The Pros and Cons of becoming a homeowner

By Angel Dawson

Whether or not you choose to purchase with HCLT, buying a house is a huge financial decision. So before you make what will likely be your largest purchase ever, here are some advantages and disadvantages to consider:

Advantages of Homeownership:

Building Equity

Your monthly mortgage payment is like a savings account. As you pay down the principle owed, your equity in the house grows. You can pay off your mortgage and greatly reduce your monthly expenses, or borrow against your equity to fund expenses down the road like your children’s college education. If you purchase a home with HCLT, all the equity you build is credited to you in the resale formula.

Tax Benefits

As a homeowner you are entitled to additional deductions such as the mortgage interest and property taxes you pay. These deductions may reduce your total income tax paid. Also, as a member of the Northwest CLT Coalition, we are working to reduce property taxes for land trust homeowners.

Your Own Home

There is no landlord telling you what to do. You are free to decorate and make changes to create a home environment that is most comfortable to you.  Also, it’s a great time to get involved with your local neighborhood association to contribute to the community where you own your home.

Stable Housing Costs

Assuming you purchase with a fixed rate mortgage your mortgage payment will never change. When you pay off the principle balance you will have no mortgage payment. If you purchase with HCLT you will always get a 30-year fixed, below-market interest rate loan through our partnership with the Washington State Housing Finance Commission (WSHFC).

Appreciation

An increase in the market “value” of your home is called appreciation. Like equity this is money that can benefit your family in the future. If you purchase with HCLT you will be paid a percentage of appreciation if you sell your home in the future based on the HCLT resale formula.

Inheritance

With HCLT you have inheritance rights, and can keep your home benefiting your family for generations to come.

Disadvantages of Homeownership:

Maintenance Costs

No landlord also means now you’re responsible for all maintenance and repairs.

High Cost

Your monthly mortgage payment could be higher then your current rent. Now your expenses also include property taxes, homeowner’s insurance, maintenance and repairs and utilities, like water and garbage, you may not pay as a renter. Of course, purchasing with HCLT can greatly reduce the cost of home ownership in Seattle’s high cost market.

Possibility of Foreclosure

A mortgage is a very long-term commitment. Banks can and do foreclose on owners who stop making their full mortgage payments on time. You could lose not only your house, but your equity and your good credit. The good thing is if you purchase with HCLT, we will be here to help you problem solve if you hit a bump in the road.

In the final analysis, only you can decide what is right for your family. But if you have questions or want to discuss your options, we’re here to help. When you submit an application and come in for an affordability analysis, we factor in all the potential costs and benefits so you can make an educated decision about whether to purchase a home with HCLT.

Terms To Watch Out For

By Angel Dawson

Obtaining financing to purchase a home can be a confusing process.  There are lots of loan products on the market. Financial education helps you avoid deceptive loans that can turn your American Dream into a financial nightmare. Do you know how to steer clear of loan sharks? Here’s a pop quiz:

1) Balloon Payment:

1. The way your wallet is so light after making your mortgage payment you practically float away.
2. A lump sum principal payment due at the end of some mortgages or other long-term loans.
3. An amortized mortgage payment that decreases over time.

2) Prepayment Penalty:

1. A fee charged to a mortgagor who pays a loan before it is due.
2. The sinking feelings in your stomach right before you have to make a mortgage payment too big for your budget.
3. When you co-sign on a loan in exchange for payment to compensate for the damage to your credit and ability to borrow money.

Remember, if you purchase with HCLT you can feel safe knowing you will always get a below market, 30-year fixed interest rate through our partnership with the Washington State Housing Finance Commission (WSHFC).

Answers: 1=B, 2=A.