STEP 1: UNDERSTANDING COMMUNITY LAND TRUSTS
(1) when the community owns the land, the community controls its own destiny; (2) removing the cost of purchasing land makes homeownership much more affordable; and (3) we need to think in the long-term when it comes to affordable housing issues.
Like most community land trusts, Cape Fear Housing Land Trust (CFHLT) is a community-based nonprofit organization that was established to own land on behalf of the community, which we use to provide homeownership opportunities to people who otherwise would not be able to buy a home.
When you buy a home from the CFHLT, you only have to cover the cost of purchasing the house itself. Instead of having to purchase the land under your home (which can cost anywhere from $30,000 to $100,000), you rent it from us under a 99-year renewable ground lease. In terms of your day-to-day experience, owning a land trust house doesn’t feel any different than owning any other type of house – except that your mortgage payment will be a much lower.
One other thing makes us different from other organizations – when we build or renovate a home, we aren’t just thinking about the first homeowner – we’re thinking about the 7th homeowner. Which means that we want our homes to be affordable not only for the first buyer, but for all subsequent
buyers. This is the reason that we have established our resale formula, which makes sure that the resale prices of our homes do not increase faster than wages. If people earning up to 120% of the Cape Fear Region’s median income are going to be able to afford our homes in the year 2050, then the only way that will work is through our resale formula – which we will explain in great length in the homebuying process.
In a nutshell, when you buy a home from Cape Fear Housing Land Trust, you:
Purchase the house but not the land - lowering purchase price.
Lease the land from the land trust under a 99-year renewable ground lease – which is as close to forever as we can make it.
Buy your house at a below-market-rate price – and in return, if you ever sell your land trust home, you agree to sell your home to another income-eligible household at below-market-rate price.
The resale formula, which governs the resale price, is pretty simple: you get (a) what you paid for the home, plus (b) 25% of the increase in the market value.
Can stay in your home as long as you live – and you can pass it along to your children or anyone else you choose.
