Homeownership: Homeownership: Permanent Affordability vs. Permanent Affordability vs.

Equity BuildingEquity Building

October 7, 2003October 7, 2003Rick Jacobus, LISCRick Jacobus, LISC

John Lowry, Burbank HousingJohn Lowry, Burbank HousingMark Moulton, Peninsula Habitat for Mark Moulton, Peninsula Habitat for

HumanityHumanity

Burbank Housing DevelopmentBurbank Housing Development

Discussion QuestionDiscussion Question

Given the costs and subsidies required, Given the costs and subsidies required, and Burbank’s goals…and Burbank’s goals…

How should they handle the potential How should they handle the potential increases in the value of that home? increases in the value of that home? Should the homeowners be allowed to Should the homeowners be allowed to

keep all of the increase in price? keep all of the increase in price? Should they have to return all of the Should they have to return all of the

increase to Burbank? increase to Burbank? ……something in the middle? something in the middle?

Peninsula Habitat for HumanityPeninsula Habitat for Humanity

Discussion QuestionDiscussion Question

Given the costs and subsidies required, Given the costs and subsidies required, and Habitat’s goals…and Habitat’s goals…

How should they handle the potential How should they handle the potential increases in the value of that home? increases in the value of that home?

Should Habitat be thinking about this Should Habitat be thinking about this differently from Burbank?differently from Burbank?

Continuum of ApproachesContinuum of Approaches

Resale Price Restrictions

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Permanent AffordabilityAsset Building

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Burbank Housing DevelopmentBurbank Housing Development

Shared Appreciation LoanShared Appreciation Loan Option to repurchase at appraised Option to repurchase at appraised

valuevalue Deferred paymentsDeferred payments Buyer repays percentage of Buyer repays percentage of

appraised value based on loan appraised value based on loan amount as a percent of initial value.amount as a percent of initial value.

Peninsula Habitat for HumanityPeninsula Habitat for Humanity

Resale Price RestrictionResale Price Restriction Option to purchase at formula price Option to purchase at formula price

(well below market)(well below market) Resale price indexed to CPI (up to 3%)Resale price indexed to CPI (up to 3%) Habitat provides mortgage with term Habitat provides mortgage with term

(length) adjusted to insure (length) adjusted to insure affordability to 50% of Area Median affordability to 50% of Area Median IncomeIncome