Buy the House, Lease the Land
MELISSA BLOCK, Host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
MICHELE NORRIS, Host:
And I'm Michele Norris.
Here's something that would get almost anyone's attention in the real estate market, a house in a good area for under $200,000. There is, of course, a catch. That price is for the house only, not the land that it sits on. Around the country, there's a growing movement to separate the house from the land to help keep prices low.
NPR's Martin Kaste reports from Seattle.
MARTIN KASTE: Seattle's Central District is an inner city neighborhood in the throes of gentrification. As prices rise, builders are scrambling to develop any vacant lot. This cluster of four brand new cottages is typical, except one of the houses is a bit different.
KASTE: Hi, Yohan(ph)?
YOHAN GRIMSRUD: Yohan, yeah.
KASTE: Okay. Martin Kaste.
Yohan Grimsrud and Jill Humphrey bought this stylish, two-bedroom house last year. Holding their month-old baby, Humphrey said this cottage cost less than the other three.
JILL HUMPHREY: I think 179.
KASTE: And the neighbors?
HUMPHREY: Neighbors were 365.
KASTE: Really? Three sixty-five for a two-bedroom house?
KASTE: They got half off because they didn't buy the land. This 700-square-foot parcel of Seattle real estate went to the nonprofit that helped them to buy the house. The Homestead Community Land Trust leases the ground back to them. Director Sheldon Cooper says the residents enjoy almost all the privileges of property ownership.
SHELDON COOPER: When we have a ground lease signed with the homeowner, that homeowner has secure rights to that home and to use that land as long as they want to.
KASTE: If and when the owners sell, they get to pocket the price appreciation on the structure, but not on the land. The land stays in the trust and the same deal is then presented to the next buyers. Cooper says it's all about taking at least some real estate out of the speculative marketplace and giving people another option.
COOPER: In a city like Seattle, when the gulf between renting and home owning is so large that fewer and fewer people can make that leap, we're filling in some of that space in between.
KASTE: The land trust concept is not new. In Burlington, Vermont, and Boulder, Colorado, the locals have used land trusts to keep some houses affordable, even as outside buyers rush into their market.
But now bigger cities are embracing the concept. Chicago has adopted land trusts as a way to create affordable housing that will stay affordable over time. You also pay less in property taxes because the houses have lower assessed values without the land. That means low-income people won't be priced out of their neighborhoods.
It's hard to find anyone who will criticize land trusts. Even developers like them for the new business they're generating. But the trend is about more than just practical considerations.
LISA BYERS: It expresses my values.
KASTE: Lisa Byers is the head of the newly created National Community Land Trust Network. She owns a land trust house on Washington State's Orcas Island, a choice she said she made because she's tired of the way Americans have come to think of their homes primarily as investments.
BYERS: People look with longing to the value system of a Native American culture, and a community land trust has a lot in common with that. Which is essentially that the idea is that you want to hold land for the common good.
KASTE: But what about those inevitable conversations at backyard barbecues, where the homeowners go on and on about yet another year of unbridled price appreciation. Doesn't Byers sometimes feel a little left out?
BYERS: You know, I guess I stepped outside of that game a while back. And I mean, I'm shocked at the values that I hear. But what it comes down to is I love my home, I love where I live and this is the path that I've chosen and I'm living a life that I love.
KASTE: And, of course, land trust homes do appreciate, they just do so more slowly. While many peoples' houses have been the real estate equivalent of Google stock, these houses are more like treasury bills. And who knows, maybe they'll turn out to have been the safer bet.
If dire predictions of a housing market crash ever came true, the owners of land trust homes would certainly have a lot to gloat about at the neighborhood barbecue, not that they would.
Martin Kaste, NPR News, Seattle.
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