Shared equity housing programs are designed to provide a key to those who are locked out of homeownership, whether because of fast-rising housing prices, stagnant incomes, or a history of discriminatory policies. As new research shows, the programs do just that.

In the Lincoln Institute of Land Policy working paper “Tracking Growth and Evaluating Performance of Shared Equity Homeownership Programs During Housing Market Fluctuations,” Ruoniu Wang of Grounded Solutions Network and his coauthors study the performance of more than 4,000 shared equity housing units across 20 states over three decades—the largest study of shared equity to date. They demonstrate that shared equity housing promotes sustainable wealth-building opportunities and lasting affordability for lower-income households, and serves an increasing number of minority households.

“Shared equity homeownership provides opportunities for families of color to access quality housing, build wealth, and counter systemic racial housing disparities,” said Grounded Solutions CEO Tony Pickett, citing how the median shared equity household accumulates approximately $14,000 across all housing cycles, compared to a median initial investment of $1,875 made at purchase.

“We believe this study validates shared equity as a sustainable housing model, and our focus is on growing the scale of shared equity housing to a level where increased numbers of lower-income families view it as something they can participate in and benefit from.”

Comparing 58 programs across the country with data from Grounded Solutions’ HomeKeeper National Data Hub, the study measures the impact of the shared equity housing sector over 33 years, from 1985–2000 (pre-housing bubble), 2001–2006 (housing boom), 2007–2012 (housing bust), and 2013–2018 (housing recovery). It finds that 95 percent of shared equity mortgages are affordable for households earning 50 to 80 percent of area median income, and the share of minority households living in shared equity homes increased from 13 percent between 1985–2000 to 43 percent between 2013–2018.

“Shared equity programs unlock stable housing opportunities and provide a foothold for people who would not otherwise be able to access homeownership, one of the main wealth-building vehicles in the United States,” said George W. “Mac” McCarthy, president of the Lincoln Institute.

Under the shared equity housing model, lower-income residents are provided the opportunity to own a home—either directly or indirectly—at a lower cost than the open market rate. When a shared equity home changes hands, the resident reaps a portion of the gains, and a portion stays with the property, providing a perpetual subsidy and allowing others to purchase the same home at below-market cost.

The study covers three types of shared equity homeownership: community land trusts, deed-restricted housing, and limited-equity cooperatives. In community land trusts, a nonprofit corporation owns the land and provides a long-term lease to the resident, who owns the structure. In deed-restricted housing, the resident owns the entire property, but the resale price is restricted to preserve affordability. In a limited-equity cooperative, the residents own a share of a corporation, which wholly owns the property.

In addition to wealth-building and affordability, the study explores other dimensions of homeownership including the demographics of homeowners served, the structure of different programs, the levels of public and private funding, and the frequency with which participants sell their home.

Will Jason is associate director of communications at the Lincoln Institute of Land Policy.

Brandon Frazier is director of communications at the Grounded Solutions Network.

Photograph: Rawpixel/iStock via Getty Images

In the nineteenth and twentieth centuries, middle neighborhoods sprang up to house middle-income families drawn to U.S. cities by the dramatic rise of industry. Today, middle neighborhoods in “magnet” cities like Seattle, Washington, or Washington, DC, have seen impressive revival or gentrification, but, in legacy cities like Baltimore, Maryland, or Cleveland, Ohio, they often face decline. Often overlooked, middle neighborhoods matter—both to the people who live in them and to their cities and regions—and solutions demand engagement not only from the neighborhood itself but also from the city, region, and state. Nothing less than the fate of millions of people and dozens of cities lies in the balance.

As the world rapidly urbanizes, millions of people are flooding into informal, unplanned settlements, often located at the urban periphery without access to services like water and sanitation. These settlements hold a quarter of the global urban population, and they are absorbing the majority of urban growth in developing regions.

While slums and informal settlements are ubiquitous, policy makers, academics, and activists are still working to understand why these places emerge and persist. To advance ideas that could help improve existing slums and generate alternatives to future ones, the Lincoln Institute collaborated with Harvard University’s Graduate School of Design and Joint Center for Housing Studies this fall to convene top international experts at the conference Slums: New Visions for an Enduring Global Phenomenon.

In this interview, Enrique Silva, associate director of the Lincoln Institute’s Program on Latin America and the Caribbean, briefly discusses the challenges presented by slums and informal settlements and the role of land.

Will Jason: The terms “slum” and “informal settlement” are often used interchangeably. Would you please first clarify the terminology?

Enrique Silva: Slums are urban areas characterized by poverty and substandard living conditions, and informal settlements are areas developed outside of planning regulations and legally sanctioned housing and land markets. There is significant overlap between the two, but some slums are part of the formal housing sector, and some informal settlements may have very good living conditions and are actually quite affluent.

WJ: Why should the world worry about the growth of slums and informal settlements?

ES: Informal settlements offer opportunities for housing and work that are not available in the formal sector for vast numbers of people. But from a moral standpoint, slums represent a system that creates and reinforces human and ecological vulnerabilities to unemployment, homelessness, violence, and disasters. If you don’t have title to demonstrate ownership of a house, for example, you usually have no legal recourse if that home is taken away from you. What is your means to claim the theft or destruction of that asset? And then there’s a question of whether informal settlements are good for the city overall. Unregulated, precariously built settlements can be sites of pollution and contamination that are hazardous for the places where the toxins are being produced as well as for everything else that’s connected—water sources, ravines, and so on.

WJ: What has been missing from conversations about slums or informal settlements?

ES: Many things have been missing. For example, academics have made huge contributions to the understanding of what slums and informal settlements are—conceptually, socially, politically, economically—but much of that knowledge does not seem to make it down to ground and into the realm of public policy. Then you have practitioners who are in the trenches making decisions on the spot, but who are often unaware or unempathetic to the contributions that academics are making. And governments, who have to develop policies that address informality and slums, tend to be vilified. These actors all have something to contribute, but they rarely interact in ways that generate lasting solutions or build empathy for the differing perspectives. The idea of the conference was to bring together institutions and actors that have an interest in doing something about slums, but that may not have a chance to meet and learn from one another. It is tough to see ideas translated into action and vice versa.

WJ: It is often suggested that the media is another key actor. How are slums portrayed in the media and popular culture?

ES: Slums are often portrayed as these black holes of social, economic, and cultural pathologies—sites of violence, insecurity, and so forth. And there’s another end of the spectrum that shows them as these places of heroic achievement in the face of horrible living conditions. Overall, what the media reinforces is that these places are different from everything else—that they are separate. We have to look at that effect more critically. Visual media, in particular, is a kind of language in images that influences the public debate. We need to figure out ways to make the influence constructive.

WJ: What is the role of land in the creation and persistence of slums and informal settlements?

ES: We focus a lot on the relationship between land and the cost of housing and transportation. Are land markets and governments able to produce enough serviced land close to employment at a cost and pace that meets the demands of households of all incomes, in particular the lowest? Are land prices low enough to make safe housing accessible to all? In many places around the world, the answer is “no,” and that is where you are most likely to see informal settlements. You also have to look at the political will and capacity of government to regulate land and housing quality in ways that are responsive to demographic and economic conditions. What can be ironic is when a housing policy is allowing informal settlements or slums to emerge and persist because it may be faster and cheaper than what governments and markets can provide. Some experts say, with little irony, that Brazil’s most effective affordable housing policy is the tolerance of favelas.

WJ: If services and infrastructure make land more valuable, could some of that value be used to help upgrade slums and informal settlements?

ES: Land-based financing tools like property tax or land value capture are not silver bullets, but they certainly play a role in ensuring land is available for housing and services, thereby improving quality of life. Land-based financing tools, when used correctly and widely, ensure that the costs and benefits of urbanization for all residents are distributed and born as equitably as possible.

WJ: Is it fair or realistic to expect residents to pay property taxes or other charges to upgrade their neighborhoods?

ES: Some people question whether residents have the capacity to pay for improvements made to their neighborhoods, but despite the myth that informality is cheap, the status quo is actually quite expensive. For example, water is often delivered to informal settlements by truck, which costs more than what residents pay for water in the formal sector. And because many informal settlements are located on the urban periphery, there are hidden costs that residents pay, in time and money, for transportation. There are certainly legal and ethical questions that need to be addressed—about legitimizing unlawful activity, for example—but if you believe that all residents should have security of tenure and a stake in a city or place, then you need to do what you can to make sure that’s the case. We were glad that the role of land and land policy in all of these issues was discussed at the Symposium.