An Innovative Home Ownership Option

There isn’t anything about the building at 2021-2025 NE Rodney to indicate it is unconventional, but there is. It is the way the current owners financed its purchase for an affordable price and how that good fortune will be “paid forward.”

Typically, a home is purchased on a “fee simple” basis. You own the home, the land it sits on, and are free to do with it what you will – within the limits of local zoning and building regulations. One of the most important benefits of this form of ownership is that the owner is entitled to all profits upon the sale of the home. Barriers to homeownership are a leading cause of the wealth disparity between white and BIPOC communities in the US (and presumably minority communities elsewhere). While there are many reasons for this, chief among them is the initial cost of a home; the purchase price, the initial down payment, and access to financing.

What is different about this house, and 400 others in the metro area (and Lincoln County), is that it is part of a Community Land Trust operated by Proud Ground, one of the largest in the US. Proud Ground is a non-profit that owns properties in trust for homebuyers. In simple terms (and community land trusts are not simple) it “owns” the land under the home but “leases” it to the homebuyer. Because the value of land in urban areas is 25% or more of the land value, holding it in a land trust reduces the cost of the buildings atop it. This effectively reduces the cost of a home to a buyer because they aren’t purchasing the land with the house.  Because Proud Ground is a nonprofit, it pays lower taxes on that land and those savings are passed on to the homeowner. In exchange, the homeowner is free to use the property as they see fit and sell the house to any qualified buyer when the time comes. Here is where this model of homeownership differs from traditional homeownership. When a home is sold, Proud Ground shares in any price appreciation 25/75, with the larger portion going to continue Proud Ground’s mission.

Proud Ground’s mission extends beyond simply owning and selling homes it owns. It also assists buyers in securing financing for the purchase and reducing the down payment burden using resources from other social programs. As a result, this model facilitates the transition of families who may be “forever renters” to the ranks of homeowners with the significant benefit that provides in terms of wealth creation; wealth that can be passed on to other family members to accrue over generations, as it has for the majority population. Sadly, Proud Ground’s ability to help people make this transition is limited by its sources of funds and rising home prices. You can help by donating money or time, but donating or selling your home for a “fair” price to them provides the greatest return.

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