CityLab University: Shared-Equity Homeownership

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To own or to rent: that is the question most Americans weigh when entering the housing market. But there is a third way. The shared-equity model includes community land trusts and co-ops, as well as below-market-rate programs tied to inclusionary zoning and resident-owned communities of manufactured homes. It’s an alternative form of ownership that provides benefits traditional markets cannot, such as long-term housing affordability and the ability for low and moderate-income families to build equity. In practice, however, co-ops and community land trusts face numerous organizational and financial challenges.

In this edition of CityLab University, we discuss the history of shared-equity housing in America, describe how it works, and imagine how it could become a bigger part of the housing ecosystem.


  • Community land trusts and co-ops are alternative land- and home-ownership structures that provide benefits traditional markets cannot.
  • Community land trusts are community-run, nonprofit landholding organizations that sell or rent the units atop the land they own, usually with the intent of keeping that housing affordable in perpetuity.
  • Housing co-ops are organizations of residents in multi-family buildings in which each household owns a share of the building. Shares can be sold at market rates, or below market rates in limited-equity co-ops, where the co-op recoups a percentage of equity earned on every transaction in order to subsidize the next shareholder.
  • Despite its growing popularity, shared-equity housing faces financial and logistical challenges that could prevent significant scale-up.


The community land trust (CLT) is an American invention, pioneered by civil-rights activist Robert Swann, who borrowed ideas from the Gramdan movement in India and Moshavim in Israel. Swann founded the first community land trust in rural Georgia in 1970, providing African-American sharecroppers an opportunity to collectively own the land they worked. The trust, New Communities Inc., was beset by financial difficulties from the start and was forced to close by the late 1980s. But it helped inspire numerous other CLTs across the country, including Washington, D.C.’s Columbia Heights Ownership Project, the first urban CLT, founded in 1976.

The Community Land Trust movement continued to grow in subsequent years. There are currently between 225 and 280 CLTs in the U.S., which together own around 15,000 home ownership units and 20,000 rental units. As housing affordability worsens, public support for CLTs appears to be rising: New York City passed a bill in 2017 enabling CLTs to access tax credits, and Houston recently announced a CLT that aims to develop 1,000 affordable units.

Each year across the U.S., government agencies and nonprofits spend large sums on rental subsidies, down-payment assistance, and other programs that help low-income people afford a place to live. This help is a godsend for those who receive it. But once a household is no longer eligible to receive rental subsidies, or a family sells the home it purchased with down-payment assistance, the housing unit they formerly occupied goes right back to being market-rate—in other words, unaffordable. So although these subsidies help people afford their housing, they don’t make the housing itself affordable long-term.

This is where CLTs come in. By taking land off the real-estate market, they make the housing units they control permanently affordable. Community land trusts own the land upon which housing units are built, and sell or rent the units on top of it. In addition to providing an affordable housing option, CLTs can help low-income families build wealth through homeownership.

Beatrice Kambere and Charles Meli, refugees from the Democratic Republic of Congo, smile at their son Jacques outside their shared-equity home in Burlington, Vermont. (Courtesy of the Champlain Housing Trust)

Buying into a CLT is different from traditional homeownership in a number of ways. Households don’t technically buy homes—they lease them, usually for 99 years. Often, members can get down-payment assistance and low-interest mortgages from the trust. Trust members elect board members who democratically determine which community needs are priorities.

Even in rapidly gentrifying areas, for-sale homes are kept relatively affordable through agreements signed by CLT members that limit the amount of appreciation that can go to the homeowner. In some cases, the trust collects a percentage of the appreciation when an owner sells, providing the funds to subsidize the next buyer. Buying into a CLT can also be a much less risky proposition than buying in the traditional housing market: One study found that homeowners in CLTs were 10 times less likely to default on their mortgages than homeowners in the private market during the Great Recession. According to the study, 82 percent of CLT homeowners who were seriously delinquent in 2010 were able to either sell or remain in their home with financial assistance from the trust, avoiding foreclosure.

Case study: Champlain Housing Trust in Burlington, Vermont

Mediha Goretic, a Bosnian immigrant and a single mom to two daughters, went from living in Section 8 housing to becoming a homeowner with the help of the Champlain Housing Trust in Burlington, Vermont, and its environs. In addition to financial support for her down payment and closing costs, she also took homeownership classes through the trust. “What I got from those classes was confidence,” she said. “I never felt, after all these years, ‘I’m helpless, I don’t know what to do now.’”

The Champlain Housing Trust is the largest CLT in the nation. It was formed by the merger of the Burlington Community Land Trust and Lake Champlain Housing Development Corporation (an affordable-housing developer), both founded in 1984 during the mayoralty of Bernie Sanders. The city government provided $200,000 in seed funding for the Burlington trust, and then in 1988 added a small property-tax increase to provide a sustainable source of funds.

The trust has grown to encompass a significant portion of the city’s housing stock, including 615 for-sale homes and about 2,300 apartments, of which 120 are in co-ops, according to Chris Donnelly, the trust’s director of community relations. As the largest CLT in America, it’s become something of a thought leader in the field: Donnelly said they get calls from out of state at least once a week, and the leaders of the trust recently consulted on new CLTs in East London and Brussels.

In addition to taxpayer funds, the trust supports itself by collecting 75 percent of the increased equity in for-sale properties, which helps keep units affordable. The size of the Champlain Housing Trust—its 2018 assets were valued at $144 million—gives the organization leverage to develop new housing on its own, using the same tax credits and funding streams as other affordable-housing developers. And despite the fact that trust members (i.e. residents) vote to elect their board members, NIMBYism doesn’t seem to be a problem: All of the projects under way in 2018 were multifamily. Renters and owners are both members of the trust, whose bylaws mandate that at least one of each be represented on the organization’s 15-member board.

This building in Shelburne, Vermont, is part of a neighborhood called Harrington Village developed by the Champlain Housing Trust. The village includes 42 affordable apartments, 36 apartments for seniors, and four shared-equity homes. (Courtesy of the Champlain Housing Trust)

By Vermont standards, the Champlain Housing Trust is a fairly large and powerful organization. The more than 6,000 people who sleep in its properties each night would make it about the 20th-largest city in the state. The trust’s renters are 75 percent white, compared to about 95 percent in the state of Vermont overall. And many of its new residents are refugees or recently arrived immigrants placed there through the State Department’s resettlement program.

Goretic, the Bosnian immigrant and mom, pays $900 a month on her mortgage for a three-bedroom condo that’s within walking distance of downtown Burlington. Rent on the open market for a similar place would be somewhere between $1,500 and $2,000, she said. Recently, she and her daughter, a college student, attended the trust’s legislative day and met with local politicians to lobby on behalf of the trust. “My life would be totally different if it wasn’t for the trust’s help,” she said. “I try to give back as much as I can.”


Like a bottle of California merlot, a co-op can be very cheap or very expensive. In New York City, home to half of the nation’s approximately 1 million co-op units, shareholders range from some of the world’s richest people, in buildings like the Dakota next to Central Park, to the lower-middle-class residents of Co-op City in the Bronx. Since co-op tenants own the building, they can create rules that fit their needs, whether those are limited-equity agreements to keep units affordable, or arcane membership requirements that weed out the hoi polloi.

It works like this: Instead of purchasing a unit in a multifamily building or complex, co-op members purchase shares in the co-op, which grants them the right to occupy a designated unit in perpetuity. Members must pay monthly dues to the co-op for maintenance, insurance, and everything else landlords usually pay for. An elected board makes decisions about how the co-op should be run, and who can buy in. (Like all housing providers, housing co-ops are required to follow anti-discrimination laws.)

Because co-op boards usually require members to live in their unit, co-ops are not commonly purchased as investments. This makes them more affordable than condos by an average of about 10 percent, and less vulnerable to economic downturns. Condo buyers, however, typically have an easier time getting financing, due to lenders’ greater familiarity with the concept and the FHA’s condo-financing program.  

Housing cooperatives began popping up around the turn of the 20th century in New York City. Many of these early purpose-built co-ops were constructed by unions or ethnic or religious groups; others were built by developers to house wealthier families. The advent of rent stabilization after World War II accelerated the trend of co-op conversions. Landlords, frustrated with low profits, and tenants, frustrated with a lack of maintenance, would come to an ownership transfer agreement, usually over the course of years.

Other co-op conversions are initiated by outside investors who buy buildings and sell shares back to tenants. Under New York City law, 15 percent of the units must have buy-in commitments, either from tenants or from outsiders who intend to live in the building. Tenant buy-in prices are usually about half of the market-rate price, making them a steal for those who can afford them. (There is, however, no law stipulating that the tenant buy-in price must be below market rate; it is usually done as a means of building goodwill during the co-op formation process.)

A group of shareholders in front of their building in New York. Between 1978 and 1988, 242,000 housing units in the city were converted to co-ops. (Courtesy of UHAB)

Initially, co-op conversions resulted in the displacement of tenants who couldn’t afford to buy in. New York and other rent-control cities eventually adopted provisions for these tenants to remain as renters, but inevitably, these kinds of co-op conversions ensure that future tenants are wealthy enough to buy in at market rates. Co-op conversions have resulted in a loss of rent-control housing and have been described as a source of gentrification. Between 1978 and 1988, 242,000 housing units were converted to co-ops in New York City.

But co-op conversions have also been an antidote to gentrification, and a key ingredient for neighborhood revitalization. Starting in the 1970s, New York City and Washington, D.C., initiated programs for tenants of tax-delinquent or vacant properties, usually in economically depressed areas, to form co-ops. Residents were able to purchase shares in these co-ops for as little as $250 in some cases, providing a powerful wealth-building tool.

Many of these co-ops formed limited-equity covenants that kept units affordable for future shareholders and renters. In 1978 alone, 11,000 buildings in New York City were converted to limited equity co-ops through these programs, according to Andy Reicher, executive director of the Urban Homesteading Alliance Board (UHAB), which supports limited-equity co-ops.

Preserving affordability and keeping up with taxes and maintenance can be a challenge for these co-ops. Since 1997, New York City has foreclosed on 74 co-ops that were behind on payments, and many others remain at risk of foreclosure. Reicher estimates that about a quarter of limited-equity co-ops in New York have some financial problems. Many were established with huge maintenance backlogs from the previous owners, which, along with inadequate guidance from the city, are at the root of the problem. With the right support, the results can be very different: The approximately 200 limited-equity co-ops that are part of UHAB’s stewardship program have a 99-percent financial success rate, Reicher said.

While market-rate co-ops have been declining in popularity in recent years (due in part to the regulatory and financial advantages of condominiums), and federal funds for limited equity co-ops were cut in the 1980s, co-ops appear to be growing in popularity among nonprofit affordable housing developers. UHAB has built or created 74 limited-equity co-ops consisting of 1,425 units since 2005. A number of community land trusts in California are planning to construct new cooperative buildings.

Case study: Limited-equity co-op in New York City

Samantha Stephens is the treasurer of a 16-unit, limited-equity co-op in Crown Heights in Brooklyn. The building, which is on a historic block that has been shot in numerous movies and TV shows, has had its own share of drama since becoming a co-op in 1984.

After paying $250 per unit to become shareholders, the initial co-op members soon fell behind on maintenance, taxes, and administrative duties. In the early days, new shareholders would buy in without providing key information, like their Social Security numbers, and then skip out without paying their fees, Stephens said. Serial vacancies compounded the building’s financial problems. When times were really tough, the co-op board would shut off the heaters during the day to save money.

Over the years, the fortunes of the co-op rose and fell based on the leadership abilities of the people who lived there. “There were points when it was mismanaged, and points when it was managed properly. I understand there was a woman … who led with an iron fist. She used to knock on people’s doors and say, ‘Excuse me, it’s April 1st.’”

When Stephens became a shareholder in 2003, the co-op was only half-occupied and owed a quarter-million dollars in real-estate taxes. Today, its financials are “200 percent better,” she said. Using resources from UHAB, Stephens helped create a more formal application process, and presented arrears agreements for shareholders and tenants with late payments. A loan from the city allowed the building to renovate its bathrooms. Now all but one of the building’s units are occupied.

Members of a New York co-op celebrate the end of a series of training workshops with a backyard barbecue. (Courtesy of UHAB)

Only nine are occupied by shareholders; the rest are rented out by the co-op. Everyone who buys shares in or rents from the co-op must have a household income below 120 percent of the area median income, or below $125,000 for a family of four, although most residents are far below that threshold.

The co-op’s limited-equity agreement ensures that share prices can only go up 3 percent per year. When shares are sold, 70 percent of the profit goes to the seller and 30 percent goes back to the co-op, which subsidizes the next buyer. In 2015, a one-bedroom apartment sold for $135,000. Monthly maintenance costs are $560 for one bedrooms and $610 for two bedrooms.

As one of the people listed as a building manager on city records, Stephens regularly receives mail from speculators interested in buying the building. But she and her fellow board members aren’t interested, she said. They know how fortunate they are to have affordable housing in their gentrifying neighborhood.

Being a shareholder in a limited-equity co-op has had a major impact on Stephens’s life: “It afforded me a certain lifestyle,” she said. “I was able to travel more, I was able to enjoy life. I was able to start my new career, take some time off, and look at what I want to do.”

Future prospects

While they can be a great help to those who are a part of them, shared-equity homeownership programs still represent a tiny slice of America’s housing stock. But certain trends in the housing sector could make shared equity a more viable option. The growing popularity of inclusionary zoning (IZ) could unlock new opportunities for affordable shared-equity housing. Two of UHAB’s most recent projects were made possible by New York City’s IZ requirements, and close to 90 percent of IZ programs produce affordable shared-equity units, according to a recent study by the Lincoln Institute for Land Policy.

There are, of course, disadvantages to shared-equity housing. Limited-equity arrangements prevent households who enter them from earning as much equity as their peers in the private market, leaving them with a smaller nest egg and making it harder to compete in the private market in the future. And while the sense of community that shared-equity housing instills can be invaluable, self-management can be a headache. It also requires a high degree of competence from non-professionals. People without strong volunteerist sensibilities might want to steer clear.  

But the shared-equity model is appealing to cities because it can preserve affordability indefinitely, while other affordable housing models are time-limited. “They’re increasingly turning out to be a really effective model for preserving neighborhoods and communities, and ensuring affordability with less subsidy, particularly in rising markets,” said Carolina Reid, faculty research advisor for the Terner Center for Housing Innovation at the University of California, Berkeley.

Following the Great Recession, Reid observed growing interest in shared-equity housing as communities sought ways to take land off of the speculative market. In the years since, the rising price of urban land has largely driven increases in home values—meaning that if land were taken out of the equation, home values would remain more stable.

For shared-equity housing to become a bigger part of America’s housing picture, new funding mechanisms would be necessary. Community land trusts and limited-equity co-ops tend to require significant initial investments to procure land and buildings, but can lower costs in the long run by preserving a city’s affordable housing stock in perpetuity. “They have a lot of potential in lots of markets,” said Reid, “but it’s going to take some public subsidy, and more capacity-building, to bring it to scale.”

Further reading

Community Land Trusts (Grounded Solutions Network)

How Bernie Sanders Made Burlington Affordable (Slate)

New Program Aims to Help Community Land Trusts Get to Scale (Shelterforce)

Stable Home Ownership in a Turbulent Economy: Delinquencies and Foreclosures Remain Low in Community Land Trusts (Lincoln Institute of Land Policy)

Cooperatives (

Condo vs. co-op: Know the differences before buying one (The Washington Post)

The Anatomy of a Co-op Conversion (The New York Times)

The State of Shared-Equity Homeownership (Shelterforce)

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