Housing land trust looking for family to buy first home in west Olympia
Thurston Housing Land Trust, a local nonprofit that was founded three years ago and aims to create permanently affordable housing, is in the process of acquiring its first piece of land, and is recruiting a low-income family to buy the house that sits on it.
South Sound has numerous conservation land trusts that preserve fish and wildlife habitat, wetlands, and farmland. This is the only community land trust aimed at providing affordable housing in Thurston County, although the model has a long history in Boston, Seattle, and Burlington, Vermont, among other U.S cities.
The land trust model generally works like this: The land trust owns the land and leases it to the homeowner through a 99-year ground lease. The homeowner buys just the house, bringing the initial purchase price down significantly. Through a formula in the ground lease, the homeowner accrues some equity but also agrees to resell the house at a restricted price to another low-income buyer.
In Olympia, land accounts for about 25% of a home’s value, according to an analysis of sale prices in 2019 done by the Thurston County Assessor’s Office. According to Appraiser Supervisor Teresa Hoyer, a standard residential city lot in Olympia is valued at between $85,000-$90,000.
In high cost cities like Seattle, land accounts for 42% of a home’s value, whereas in lower cost cities such as Indianapolis or Philadelphia, it’s closer to 20%, according to data from Redfin.
The idea is that there are many families who have a stable income and are making enough money to afford rental housing, but could not afford the down payment or additional credit and financing hurdles involved in purchasing a house. In Thurston County, as in many areas of the United States, housing prices are rising much faster than incomes, pushing homeownership further out of reach, even for middle-class households. Increasingly, family wealth is becoming a prerequisite for purchasing a home and building wealth.
There are 280 housing land trusts across the United States. The largest is Champlain Housing Trust in Burlington, Vermont. Started in 1984, it now manages 620 houses and 2,300 rental and co-op apartments — about 7.6% of Burlington’s total housing stock. The second largest, Dudley Neighbors in Boston, has 225 units. In Seattle, Homestead Community Land Trust stewards the land for over 200 houses.
The first house in Thurston County
Russ Fox, a retired professor from The Evergreen State College, has agreed to donate to the land trust a west Olympia parcel containing a five-bedroom, 1-1/2-bath home. As part of the plan, Fox will simultaneously sell the home to a family that is selected by the land trust. By subtracting the value of the land from the transaction, it will reduce the price significantly.
The land trust will then work with the family to secure a mortgage and access government funding such as down payment assistance. Land trusts in other cities have secured state, local, and federal government funding such as low-income housing tax credits and housing trust fund dollars that sometimes go to for-profit developers to create units that only have temporary affordability requirements.
Fox taught urban planning and community development at Evergreen for 40 years. Among the topics he taught was affordable housing.
“So many of the other historical government programs we have for affordable housing often only have a 20-year benefit and then housing can go market rate and it’s no longer a part of that,” Fox said. “When I discovered the community land trust model in the 1990s, I realized, or my opinion became, that if you’re going to invest public funds for low-income housing, particularly for homeownership, that this is the most elegant way to do it, because it makes that community investment in perpetuity.”
Searching for buyers
Thurston Housing Land Trust is partnering with Habitat for Humanity of the South Sound to screen applicants. Those interested must apply though Habitat for Humanity of the South Sound by Jan. 14 and select a specific section about the land trust opportunity. Black, indigenous, and other people of color are encouraged to apply.
Applicants must make less than 80% of the area’s median income, which would be $74,900 for a family of five.
“The big challenge usually has been and will be in this case getting the banks or mortgage lenders to do something that’s not traditional or what they’re used to doing,” Fox said, adding that lenders may be unfamiliar with the land trust model and ground lease terms.
However, research shows that land trusts increase homeowner stability: A 2011 study by the Lincolnist Institute of Land Policy found that 8.6% of conventional mortgages ended up in foreclosure, compared to only 1.3% of mortgages held by land trust homeowners.
Down the road, board members say they’re hoping to acquire more land with government or donor funding where they will build or rehab housing and sell to low-income families.
“The long range vision is for creating more housing stock that is truly out of the speculative market and permanently affordable,” said the land trust’s vice president Susan Davenport.
Davenport said the trust is talking to several people who are interested in donating land to the trust as part of their will. Fox, who is 76, is hoping that his example will move other property owners to see the community benefit in the land trust model and be moved to donate land too.
“I’m assured that it will be a house that’s in the low- and medium-income housing portfolio for this community forever,” Fox said.
This story was originally published January 10, 2021 at 5:45 AM.
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