A Radical Solution to a Pressing Problem

As an affordable housing advocate, I’ve seen the devastating effects of skyrocketing home prices and diminishing inventory firsthand. It’s a problem that keeps me up at night, wondering how on earth we can create lasting solutions for the millions of families struggling to find a decent, affordable place to call home. But just when I was about to throw in the towel, a glimmer of hope appeared in the form of an innovative approach – the community land trust (CLT).

Redefining Homeownership

CLTs are nonprofit organizations that acquire land and then sell or lease the homes on that land to income-eligible buyers. The catch? The homeowners don’t actually own the land – they only own the structure itself. This may sound like a raw deal, but bear with me. By separating the land from the home, CLTs are able to keep the property affordable in perpetuity, ensuring that it remains accessible to low- and moderate-income families, even as the surrounding neighborhood gentrifies.

A Shared Equity Model

The shared equity model is the secret sauce that makes CLTs work. When a homeowner in a CLT decides to sell, they’re only allowed to pocket a portion of the home’s appreciated value. The rest goes back to the CLT, which then uses those funds to keep the home affordable for the next buyer. It’s a beautifully simple concept that’s changing the face of homeownership for communities across the country.

Collaboration is Key

Of course, making CLTs a reality takes a lot of hard work and collaboration. That’s why I was so excited to learn about Freddie Mac’s involvement in helping to establish and expand these programs in cities like Milwaukee, Minneapolis, and Omaha. By serving as a catalyst for coalition building and providing technical assistance, Freddie Mac is playing a crucial role in empowering local governments and nonprofit organizations to embrace the power of shared equity.

Unlocking Opportunity in Milwaukee

Take Milwaukee, for example. Despite significant strides in creating affordable housing, the city was still grappling with severe racial inequities in homeownership and the ever-increasing burden of rising rents. That’s where Freddie Mac stepped in, offering educational support on shared equity programs and collaborating with the newly-formed Milwaukee Community Land Trust to help them get their program off the ground.

Stabilizing Homeownership in Minneapolis

Over in Minneapolis, Freddie Mac tackled a different challenge – the looming threat of foreclosure. With over 4,000 loans in forbearance, the city was in desperate need of a way to preserve homeownership and keep families in their homes. By leveraging the CLT model, Freddie Mac helped design a distressed-homeownership stabilization program that allows eligible homeowners to convert their mortgages to shared equity arrangements, safeguarding their homes from future affordability issues.

Bridging the Racial Wealth Gap in Omaha

In Omaha, the story was all too familiar – a declining homeownership rate, particularly among Black households, and a yawning racial wealth gap. Freddie Mac responded by providing training and technical assistance to the Omaha Municipal Land Bank, helping them rewrite their policies to prioritize wealth-building and engage diverse community representatives.

A Sustainable Vision for the Future

As I reflect on these incredible collaborations, I can’t help but feel a renewed sense of optimism. By working hand-in-hand with local partners, Freddie Mac is proving that CLTs can be a powerful tool for preserving affordable housing and creating pathways to sustainable homeownership, even in the face of daunting economic challenges.

The Path Forward

Of course, there’s still a long way to go. The housing crisis is far from over, and the need for affordable, accessible homes continues to grow. But with innovative approaches like CLTs, and visionary organizations like Freddie Mac leading the charge, I believe we can make real progress towards a future where everyone has a safe, affordable place to call home.

So, if you’re feeling discouraged by the state of the housing market, I encourage you to look into the incredible work being done by community land trusts and their partners. Who knows – maybe you’ll be inspired to join the movement and help create a more equitable, sustainable future for us all. After all, as the old saying goes, “where there’s a will, there’s a way” – and with CLTs, that way just might be paved with opportunity.