Shared Equity Homeownership: Filling the Housing Gap for Greater Boston's Working Class

Abstract

The dream of owning a home has long been associated with America’s middle class. For decades, the cycle repeated itself as one of the first major purchases for newlyweds was a home in which to raise their family. Later, after they had paid off the mortgage, the house became an asset for the homeowners, which many used to finance a comfortable retirement. That cycle was broken by the recent economic recession. At their peak, housing prices climbed to historic heights in 2006, only to come crashing down two years later as the financial crisis took hold. Values plummeted, and many lost their homes to foreclosure. Nearly ten years later, the economy has recovered, and housing prices have surged. As a result, working class families are priced out of cities such as Boston, and housing problems in the nation’s urban centers that once affected only “poor” people are now impacting a greater number of households at higher incomes. This thesis attempts to provide a partial solution to the housing dilemma that large urban centers are grappling with around the country. It proposes as an alternative approach, Shared Equity Homeownership (SEH), to provide a new avenue for the working class to afford homes in cities like Boston. Nine shared equity programs across the nation are examined and analyzed, as is Boston’s Dudley Neighborhood Initiative’s shared equity program. While the data and analysis employed in this thesis show that the shared equity housing model is an effective tool to expand homeownership for lower income households, it is inconclusive regarding its effectiveness for working class income earners. Primarily, there is not enough evidence to claim that these same programs would provide similar results if they targeted middle-class homebuyers. In addition, housing experts feel that middle income homebuyers would not want to sacrifice personal gain for the benefits of shared equity housing, even though it is available for a lower price than market-rate housing. With more government resources and measures to standardize shared equity housing, it may be easier for shared equity homeownership programs to attract working class buyers and become a viable option. Tackling the housing affordability issue requires a multilayered approach of public and private programs. Shared equity housing has the potential to be a larger part of that approach.