The nonprofit Homestead Community Land Trust is working to put homeownership in reach for a lucky few lower-income residents in the Seattle area. But the same market forces that make buying a home hard for anyone without a pile of cash — tight inventory, high prices, limited access to financing — make it challenging for land trusts to scale their supply of homes to meet the need.
In August, billionaire MacKenzie Scott gave Homestead a $10 million gift to help overcome some of those financial hurdles and expand their work.
“It’s a total game-changer,” said Kathleen Hosfeld, Homestead’s executive director. “Homestead has been, if I may say, an under-resourced gem in King County.”
The organization hasn’t decided how exactly it will use the money, but Hosfeld said some of it will likely be used to help expand its nine-person staff and some to help secure the bank loans they need to buy land and pay for construction of new homes.
Scott’s gift to Homestead is part of her philanthropic pledge to give away her tens of billions in wealth to nonprofits and worthy causes. Nonprofits cannot apply for money from Scott and even those who get money have sometimes been left unsure about why they were chosen.
But it’s clear Scott is interested in affordable homeownership. Grounded Solutions Network and National Housing Trust — two national nonprofits supporting the work of community land trusts like Homestead — also received $12 million gifts from Scott this year. Last year, she gave more than $400 million to Habitat for Humanity, including $7.5 million for the local chapter that operates in Seattle and King and Kittitas counties.
“We really think this is a tipping point in favor of not just homeownership, but in favor of models like ours that are addressing systemic sources of housing inequities,” said Hosfeld.
Homestead sells homes to people earning 80% or less than the area median income, which is currently an annual income of about $101,000 for a family of four in Seattle. Sale prices vary by home size and location, but the homes typically cost Homestead’s buyers between $150,000 and $350,000.
Like any other homeowner, land trust homeowners get to live in their home for as long as they want, so long as they keep up on the mortgage. It doesn’t matter if their income increases or the household size changes, the home is theirs. They can even pass it on as an inheritance to their children.
If a land trust owner decides to sell their home, it must be sold at below market value to another income-qualified buyer vetted by Homestead. The other tradeoff is that owners earn equity at a rate of 1.5% per year, far less than they likely would on the open market. But since land trust owners almost certainly can’t afford to buy in a pricey place like Seattle, it’s still a chance to build wealth that renting doesn’t provide.
The nonprofit has about 250 homes in its portfolio with a few dozen more in its project pipeline. Homestead has recently ventured into building condos to maximize the number of homes it can build on scarce land in the Seattle area.
On Phinney Ridge, Homestead is building a 25-unit condo building on a piece of land that was donated by the former owners. Six of the units will be sold at market prices to help subsidize the below-market sale of the other 19 condos.
Get daily news in your inbox
This newsletter curates some of the most important headlines of the day from Crosscut and other news outlets.