Solving the Housing Crisis With Community Land Trusts

As the Federal government and banks roll out plans to help underwater homeowners avoid foreclosures and to protect real estate values from further decline, one community approach is having notable success in preventing the problems in the first place. Meet the Community Land Trust.  These innovative organizations – created over thirty years ago - focus on stabilizing communities by solving the problem of low income housing and thus preventing some of the underlying issues that cause housing bubbles and consequent bursts. And they have spread all across the country.

What exactly is a Community Land Trust? The Community Land Trust Network gives an excellent description.  “A community land trust (CLT) is a private non-profit community organization that safeguards land in order to provide affordable housing opportunities. CLTs buy and hold land permanently, preventing market factors from causing prices to rise."

“CLTs build and sell affordably-priced homes to families with limited incomes— the CLT keeps the price of homes affordable by separating the price of the house from the cost of the land. When a family decides to sell a CLT home, the home is resold at an affordable price to another homebuyer with a limited income."

“The goal of CLTs is to balance the needs of homeowners to build equity and gain stability in their lives with the needs of the community to preserve affordable home ownership opportunities for future generations.” 


And many CLT’s are accomplishing their goals.  According to MortgageOrb.com, a recent study conducted by The Housing Fund and Vanderbilt University found that conventional homeowners were 10 times more likely to be in foreclosure proceedings than CLT homeowners at the end of 2010. (The foreclosure rates were 4.63% and 0.46%  for the conventional and CLT markets, respectively.)

In her excellent piece in the Christian Science Monitor, (A Counterweight to Foreclosure Crisis, Community Land Trusts?) Nancy Humphrey Case describes how The Champlain Housing Trust in Vermont enabled one couple “to find a house they could afford, secure a loan, and survive the recession – without missing a single mortgage payment.”

At the moment there are over five thousand community land trust homes across the country; but more are on the way as other cities are considering the CLT model. Of course, some critics disparage the land trusts as enemies of the free market, even leaning towards socialism.  But there’s no doubt that CLTs provide one very effective way to create affordable housing and prevent the ill effects caused by real estate booms and busts.  And they have the great advantage of being local!