As some of you may already know, I used to be a real estate agent before the girls entered my life. My specialty as an agent was helping first time home buyers. And even more specifically, helping people who thought a home was out of their reach. The good news is there are some great programs out there for buyers who have good credit, just not enough income to afford homes in their area. My absolute FAVORITE program of all time is Portland Community Land Trust.
PCLT is a non-profit organization (funded by private and public funds) that helps bridge the gap for hard working families. They do this by lowering the cost of home ownership. Their model is simple: they hold the land in trust while the buyer owns the house and improvements. So the home buyer only needs to come up with the price of the house itself, without the value of the land it sits on. This of course dramatically decreases the cost of ownership, and makes it possible for many families to own property that wouldn't be able to otherwise. The homeowner then pays a small monthly fee to the land trust and signs a lease agreement for the land itself. Two years ago it was around $20/month (depending on the property) to lease the land... very minimal!
Here's some info directly from a PCLT brochure I dug up:
How does PCLT homeownership compare to other homeownership?
- The homeowner has a mortgage with a bank.
- The homeowner accumulates equity.
- The home can be inherited.
- The homeowner pays property taxes.
- Homeowner can make alterations and improvements.
- The homeowner receives federal mortgage tax deduction.
- The purchase price is lower, usually by about 20-30% below the market rate because the land is already paid for.
- The CLT owns the land, and the homeowner leases the land from the CLT for a nominal fee.
- Selling a CLT home helps limited income families in the same way as buying a CLT home.
The good news from a sustainability standpoint, the land remains affordable forever (in perpetuity) because the home can only be sold back to PCLT and resold to another qualifying home buyer. They use an independent appraiser to determine the market value of the home, so it is very fair to the current home owner.
PCLT homes generally cost $60,000-$100,000 less than a market home. So for a family who has a steady income and good credit, yet doesn't make enough to qualify for a home in this area, it really is an excellent way to go! They can get a much nicer home for their money because the land value isn't attached to the purchase price.
In the most recent newsletter that I received from PCLT they introduced their newest development Pardee Commons (pictured above). It's going to have 10 homes, all 2-3 bedrooms. Some will be duplex style homes while others will be single detached homes. It's a very "green" development! They're going to meet Oregon Department of Energy's High Performance Home standard, which means they will use 50% less power than homes built only to code. They will feature solar hot water, extra insulation, high efficiency heat pumps, permeable pavers and more! Which should make them even more affordable to own because utility bills will be super low. These homes will be sold for $124,500-$158,000, ridiculously affordable for this area!
Don't live in the Portland Metro area? Still really interested about this whole concept? There are hundreds of Community Land Trusts across the country, most of them use this same basic model! Just do a google search of "Community Land Trust Your City Name" and see what you come up with. :)
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