The basic idea is that a nonprofit purchases the land in a community and holds it in perpetuity. It rents the land long-term to residents (and for the most part, they're required to be residents), instead of selling it. It's still possible for residents to purchase homes- they just won't own the land they're sitting on top of. That way, you avoid speculation and skyrocketing land prices. Many CLTs also designate some proportion of the land as "low-income", and set accordingly lower rents for those residents.
I'm assuming that one would go to a land trust, sign a contract to rent a lot for $X/month for 99 years (or something similar).
Then you would build a house, probably get a construction mortgage to afford it. Then your monthly payments would be mortgage + $X.
Area becomes wildly attractive and people move in. Suddenly people are offering mortgage * 200% for your house, knowing they'll add $X to their money payment.
Housing still gets expensive. What am I missing?
In some ways, this appears to be analogous to rent control, except each apartment is replaced by a home.
I see some similar issues, though-- if a CLT becomes extremely attractive, I wouldn't suspect it wouldn't necessarily respond to signals that more housing stock is needed. You could get to the point that there's a scarcity of affordable housing, much as you see with rent control today.
Am I missing something in this analysis?
[0] https://upload.wikimedia.org/wikipedia/commons/5/50/Communit...
I see it as being compatible with a land value tax (which would align incentives optimally), but not a replacement for it.
What's stopping CLTs from existing today? Is it merely the novelty and relative complication of the CLT? Or is there policy that makes them impractical?
I suppose they're mainly helpful for before when a housing market reaches the breaking point. That is, before the land is unaffordable.
Are people trying CLTs in Detroit? It seems a natural place to experiment with it.
Sure enough, I noticed a sign from a concerned citizens group at Starbucks the other day. Basically rallying up the troops to oppose a new 5 story apartment is a very residential wealthy area.
Thinking about for a minute, I started to get pretty damn angry: 1. The average house in this neighborhood is well over $500k. 2. The prices have probably tripled since the mid 90's. 3. The vast majority of homeowners are aged 50+ with nice gov, military, and private sector pensions.
Meanwhile, those of us aged 35 and below are either living with roommates or spending about 2/3 of our take home pay on rent. Buying a house in the area is out of reach for everyone except a few couples with high dual incomes.
Part of me wants to start going to these meetings to let these older folks know that these type of restrictions are really damaging to the generations behind them. I doubt they'd care much, though.
When a city becomes unaffordable, when rents skyrocket-- those expenses are someone else's windfalls. When people expect the value of real estate to rise and rise indefinitely-- those windfalls are someone else's expenses.
I've come to believe that so much of these structural problems are essentially reducible to issues of land-use (property/land taxes), but there is so little focus at present on reforming this.