Community land trusts, sometimes referred to as CLT’s, are a powerful means to counter to a red-hot real estate market. All too often, during times of exponential growth lower wage earners are left with few options to be able to afford a home of their own. We all know encouraging homeownership creates a variety of economic and community benefits, and in addition to the services that the CDA provides — such as first-time homeownership counseling and down payment assistance — promoting more access to buying a home makes Scott County stronger.
What is a community land trust?
A CLT is a nonprofit that acquires land and maintains ownership of it permanently, and a prospective homeowner enters a long-term, renewable lease instead of a traditional sale. When it’s time to sell, the homeowner earns a portion of the increased property value and the remainder of the proceeds stays in the trust and the home is then available to another homeowner.
Why is this sort of real estate important to Scott County?
There are two primary reasons why the CDA is an advocate of a CLT. One, it provides homeownership opportunities to lower wage earners, those making between 30% and 80% of the area median income, which translates to between $30-75,000 for a family of four. With housing prices rising, this helps create opportunities for people to own a home.
Second, this allows those earning lower incomes a chance to build wealth. As they will receive all of the equity they’ve paid for and a portion of the appreciation of the home when they sell, this develops economic mobility for people.
What are other reasons why these are important?
- As with home ownership, a CLT builds community. The majority of CLT homeowners live in their home for 10 years or less and then buy a home in the open real estate market, often in the same community.
- They provide stable housing. Often, a mortgage payment can be lower than rent, and mortgage payments are more predictable and stable than rent, especially in our current market which is increasing 2-5% a year.
- Fewer foreclosures: CLT homeowners experience foreclosure at a lower rate than other homeowners — they are in a house they can afford, and the CDA is notified immediately upon a defaulted payment to assist the homeowner get back on track.
- And so much more.
If you’d like to learn more about community land trusts, please contact us. We’d love to share more information about how a CLT might be right for you!