For many American families, homeownership provides access to quality neighborhoods with strong schools and a way to build financial assets. Unfortunately, the housing crisis continues to hit families who earn small wages especially hard, with millions facing foreclosure and eviction. Capital Impact Partners’ shared equity program model enables homebuyers to partner with a government or nonprofit agency acting as a co-investor to reduce homeownership costs. In return, homebuyers agree to limit, or share, their equity appreciation to preserve affordability so that the initial public investment can ultimately serve far more families.
With funds from the Social Innovation Fund (SIF), Capital Impact Partners’ Cornerstone Homeownership Innovation Program (CHIP) initiative provides grants to homeownership programs across the country that preserves long–term affordability and community stability. CHIP is administered by Capital Impact’s Cornerstone Partnership Initiative, a peer network supporting programs that help more hard–working people buy homes today, maintain those homes, and keep them affordable in the future. By adopting common principles, sharing best practices, and providing tools and resources, the partnership aims to help governments and nonprofits stretch their dollars further to help more people realize the dream of homeownership.
Capital Impact Partners’ innovation lies in this public-private partnership, the backbone of the shared equity program model that builds capacity of local programs and makes affordable and sustainable homeownership a reality for millions of Americans. The Social Innovation Fund was particularly pleased that Capital Impact Partners offered a plan to scale this model nationally with heavy technical assistance supports, and thus provided a two-year continuation grant. The additional funding will enable Capital Impact Partners to continue funding subgrantees through the CHIP, as well as support technical assistance, evaluation and administration. In their first year alone, CHIP’s sub-grantees served over 600 households and as their second year is underway, CHIP has already served an additional 283 households. Capital Impact Partners is generating critical investments that create a high quality of life for many families as they benefit from the opportunity of homeownership.
Previous research on shared equity housing programs has yielded preliminary levels of evidence; however, Capital Impact Partners is expected to reach strong levels of evidence with its unified subgrantee evaluation plan and strong counterfactual design. Using a multi-site quasi-experimental design that involves both a small randomized control trial and a larger quasi-experimental design, Capital Impact Partners aim to understand if the shared equity housing programs (1) provide participants access to more affordable homes, (2) help participants build assets and wealth through homeownership, (3) make participants less likely to default on a mortgage, (4) move participants towards participation in the unsubsidized housing market, and (5) improve participants’ access to quality neighborhoods.
Over the course of the program, Cornerstone anticipates that over $15 million will be invested in building the capacity of shared equity programs across the country and bringing this innovative model to scale. Capital Impact Partners is using SIF funds to replicate their model to nine communities with a growth goal of serving 2,500 homeowners. In addition, Capital Impact Partners seek to expand the program far beyond its grants by offering technical assistance through the Cornerstone Partnership’s peer network. This will result in building the capacity of local organizations to effectively manage public investment in affordable homeownership, ensuring that low-income families realize measurable economic benefits through homeownership, and addressing the troubling decline in nationwide homeownership rates.
While Capital Impact Partners focuses its scaling efforts on increasing capacity to add homes and/or households to their portfolio, it is also tracking families served and has provided stewardship services to 2,515 families in the life of its programs.
Transforming Lives, Strengthening Communities
Night after night Sara asked Sen, her husband “Don’t these people have to go to work?” There was always a problem occurring whether it was the noise, rent increases or the landlord’s slow response to plumbing issues and on top of that, Sara and Sen just learned they were pregnant. With their son in mind, their anxiety increased and they questioned if their current tiny apartment was a stable living environment.
They knew their jobs wouldn’t make them rich. As a social service counselor for homeless families and an employee of a local beverage distributor, they knew better than to dream of homeownership in an expensive city like Seattle. But when a coworker told Sara about Homestead Community Land Trust, she listened intently thinking of her son.
“We knew nothing about buying a home and were really nervous about the process,” Sara reminisces with Sen. “Everything changed when we connected with Homestead. Remember how they looked at our financial stuff and coached us on what we needed to work on? Remember that spark of hope?”
With support from staff at Homestead they lowered their debt, built up their savings and attended a home-buying class. Now they are proud owners of a three-bedroom home near transit, walking distance to Sara’s job and close to much of Sen’s extended family.
“I’ll never forget that sunny day when my son, just one at the time, stood in our living room playing with keys to our new home laughing,” Sen recalls. “We couldn’t have done it without Homestead.”