A practical solution to housing affordability

Shared: September 21, 2021

By: Jack Miller

Housing affordability has become a big challenge in communities throughout the U.S., as home prices rise, particularly at lower price points

At a Labor Day weekend gathering, a new friend asked me, “what do you think about housing affordability, and what is your industry doing about it?” This person works with low-income clients in her industry and sees the impact housing has on them on a day-to-day level.

I could only agree that affordability is a huge issue, and that, in many ways, the brokerage industry has little impact on this, except through education of buyers on programs that can help them buy their first home.

This led me back to an approach to housing affordability – the community land trust – that has had some traction in the last few years, with a few success stories and some new players looking to use this model to improve affordability in real estate. This article provides an overview of the land trust approach and a few examples of its application.

Housing affordability

Housing affordability, as T3 Sixty wrote about in the 2020 Swanepoel Trends Report, is a persistent challenge to the residential real estate industry. The prices of homes in the lower-third pricing tier have grown significantly more than those in the higher pricing tiers from 2009 to 2020, according to S&P Case-Shiller data. This makes the entry into the housing market challenging; even with low interest rates, many would-be first-time homebuyers face challenges in purchasing a home due to home pricing alone.

The homes for entry-level buyers become a foundation of wealth for their families. These first homes form the basis for wealth and help these owners, over time, become move-up buyers. Keeping a healthy entry-level tier of housing insures the health of the industry, and, in a broader, more philosophical context, the health of the American Dream of homeownership.

Community land trusts

Community land trusts have emerged as a housing affordability solution. These organizations are established to buy land and hold it for the purpose of providing affordable housing. Residents purchase homes on a community land trust property, and have ownership of the structure and improvements but not the land itself.

The community land trust supplies a land lease to homeowners, and usually has rules related to keeping the housing stock affordable as well as making it available specifically for lower-income buyers.

As a significant amount of home price appreciation lies in the land itself, this approach enables a sustainable model for providing affordable housing. There are currently approximately 225 community land trusts in the United States, according to groundedsolutions.org, a nonprofit that promotes the formation of community land trusts.

A few community land trusts are reviewed below.

Houston Texas Community Land Trust (Houston)

The Houston Community Land Trust (HCLT) was formed in 2018 to protect affordability in the city’s historic Third Ward and Independence Heights neighborhoods, which are predominantly Black areas. To supply permanently affordable housing and keep the existing community intact, HCLT builds new single-family homes on abandoned properties acquired by program partner Houston Land Bank.

As of mid-2019, thanks to city subsidies averaging approximately $105,000 per house, 17 houses had been completed at community land trust sites scattered throughout the neighborhoods. These homes can be sold for significantly less than a traditional, market-rate house, with three-bedroom homes priced at approximately $75,000.

To be eligible to purchase one of HCLT’s homes, a family’s household income cannot exceed 80 percent of the area median income. Furthermore, potential buyers must secure a fixed-rate, 30-year mortgage in addition to meeting other program requirements.

Purchasers then own their home through a 99-year lease from HCLT, which can be inherited by an owner’s heirs. To help preserve affordability in perpetuity, HCLT uses a formula to calculate the allowed sales price for a home and requires that future buyers meet the same eligibility requirements as the first.

Oakland Community Land Trust (Oakland, California)

In Oakland, California, the lingering effects of the foreclosure crisis associated with the Great Recession prompted local affordable housing advocates to form the Oakland Community Land Trust (OCLT) in 2009. Two recent projects illustrate how OCLT functions to provide affordable housing.

In the first, a motivated group of neighborhood residents, along with the assistance of an owner interested in selling to OCLT, preserved eight affordable residential units, four commercial spaces and a community garden at a building in the city’s San Antonio neighborhood.

In the second, a social media fundraising campaign helped secure funds to purchase a building in the city’s Fruitvale neighborhood after the owner expressed the intent to put it on the market. This allowed the worker-owned cafe to continue operating and has preserved two units of affordable housing for low-income families.

A ground-up approach to community ownership

A new approach to community land ownership is currently being pioneered by entrepreneur and tech executive Marc Lore, who sold Jet.com to Walmart for $3.3 billion in 2016. Lore has launched a project called Telosa that will build a city from scratch with the concept of community land ownership as a fundamental building block for what he describes as “equitism,” in which all residents of the city benefit from the increasing value of the land owned by the city.

The first phase of construction, which would accommodate 50,000 residents across 1,500 acres, comes with an estimated cost of $25 billion. The whole project is expected to exceed $400 billion, with the city reaching its target population of 5 million within four decades. The project has not picked a location yet, but is considering Nevada, Utah, Idaho, Arizona, Texas and Appalachia as prospects.

While blue-sky projects like this face tremendous challenges, this concept of addressing housing affordability and inclusion at the front end of a project represents an innovative way to address the problem. It presents a compelling alternative to traditional community land trusts, which require subsidies and community action.


Preservation of entry-level and affordable housing are critical issues to the residential real estate industry. While real estate brokers and agents do not necessarily have a direct role in creation of affordable housing, being aware of and supporting mechanisms such as community land trust initiatives are one way to improve affordable housing availability. Local land trust initiatives exist in hundreds of communities in the United States, and as part of advocacy and development of future homeowners, these initiatives deserve attention and support from our industry.