Exploring Habitat’s Shared Equity Models: Assessing Impacts on Homeowners’ Financial Health

• In Event: Housing Stability and Financial Well-Being

Abstract

Developing and preserving affordable housing for low-income households has become increasingly challenging due to the rising costs of land and construction, and the growing demand for affordable homes that far surpasses the current supply. Non-profit organizations, such as Habitat for Humanity (or Habitat), are exploring solutions to these challenges to help households with lower-incomes secure affordable housing.

Affordable housing organizations across the U.S., including Habitat’s local affiliates (Habitat affiliates), have adopted strategies to preserve housing affordability for future generations of homeowners with low incomes. One such strategy is shared equity, which Habitat defines as any program designed to preserve housing affordability for at least 30 years through resale restrictions, which remain in place for subsequent sales. Shared equity homes are typically made affordable through subsidies that lower the purchase price of the home. Habitat affiliates often use shared equity models, such as community land trusts (CLT), ground leases, limited-equity cooperatives, deed restrictions, and resident-owned communities.

Previous research shows that shared equity models, including resale restrictions and CLTs, can increase and sustain the affordable housing supply, improve wealth-building (although a part of accumulated housing wealth remain in the shared equity home for the next low-income homebuyer), enhance financial stability, and protect homeowners from unintended consequences such as defaults, foreclosures, and displacement (Choi et al., 2017; Jacobus & Davis, 2010; Sherriff & Lubell, 2009; Theodos et al. 2017; Wang et al., 2019). However, less studies have specifically examined overall wealth accumulation (including non-housing assets), financial health, and residential stability—resulting from the affordable housing payments—by comparing these outcomes between shared equity homeowners, fee-simple (i.e., non-shared equity) homeowners and renters, while using samples from different regions. This evaluation addresses this gap by examining how shared equity models impact wealth accumulation, financial health, and residential stability across the Habitat affiliate network by comparing them between Habitat homeowners residing in shared equity and Habitat or non-Habitat homeowners residing in fee simple homes as well as non-Habitat renters.

Using Habitat’s internal administrative data, Black Knight’s mortgage data, Equifax’s longitudinal data, and cross-sectional survey data from both Habitat and non-Habitat families (including homeowners and renters), this evaluation, after matching samples, statistically explores (1) the impact of Habitat’s shared equity models on key outcomes and (2) variations in these outcomes by race, ethnicity, gender, housing market conditions, and neighborhood attributes.

Author

• Daisuke Nagase, Habitat for Humanity International
  Presenting Author