How CLT innovators are pioneering structural changes in housing markets

Longstanding discriminatory practices have led to devaluation of homes in Black-majority neighborhoods, making them targets for real estate speculation and leaving them vulnerable to forms of development that increasingly displace Black residents.
May 20, 2022
Stuart Yasgur
Stuart Yasgur
Economic Architecture
Andre Perry
Andre Perry
Senior Fellow
Brookings Metro

In addition, economic shocks resulting from sudden, unpredictable events like hurricanes or pandemics disproportionately impact Black communities and can also can cause rapid displacement. This is another aspect of a broad pattern of racism and environmental and economic injustice.

But it’s important to recognize that displacement isn’t primarily caused by sudden disruptions, though they can trigger it or make it worse. Whether in good times or bad, Black people are vulnerable to displacement due to longstanding, man-made, structural conditions in our markets and public policies. They require fundamental, structural solutions.

In search of such solutions, some community groups are experimenting with community land trusts (CLTs). CLTs fundamentally change the structure of homeownership by separating the value of the home from the value of the land it sits on. Homebuyers pay the price of the house alone, while ownership of the land is retained by a community-led trust. This takes the value of the land and its appreciation out of the equation, permanently lowering the price of the home and disincentivizing the kind of speculative development that leads to gentrification and displacement. CLT ownership is designed to provide housing security, maintain affordability, enable residents to stay in the home as long as they want, and preserve community and cohesiveness in the neighborhood.

To date CLTs have mainly been used to develop owner-occupied residential housing. But as gentrification and displacement pressures mount, and as communities seek to recover from pandemic-induced disruptions, CLTs are attracting growing interest, and the CLT structure is getting adapted and applied in new ways. For example, it’s now used to establish secure rental housing, champion tenants’ rights, convert existing homes to affordable housing, or develop affordable commercial properties, green spaces, and multifamily housing. CLT growth and adaptations are also starting to generate market and policy shifts, such as changes in state property tax law to accommodate them, or new products for banks, governments, and government-sponsored enterprises (GSEs) to fund them.

There only about 10,000 CLT units nationwide – a tiny number compared to overall affordable housing inventory, which includes 7.3 million rental units [i]. Existing CLTs meet only about 1% of the estimated need for them, so there both need and potential for them to scale up. Some trusts applying the CLT model in new ways have just a handful of units in their portfolios. But the power of their innovations isn’t limited to the number of units they create. It’s also in how they make structural changes to market conditions, which may have far-reaching impacts.

CLTs are evolving alternative ways for affordable properties to be bought, sold, assessed, taxed, financed, and managed for the benefit of residents and communities. Those sorts of structural changes to the housing market could be key to unwinding elements of structural racism embedded in them today, including the structures that drive displacement of Black residents.

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