Property Ownership Barriers: SpeedLURNing Recap
Last month, we brought back what was one of our first events as an organization and one that was instrumental in helping us inform our current work in the Los Angeles Street Vendor Campaign - SpeedLURNing!
If you missed it, SpeedLURNing is an event that brings people together to discuss important community issues and formulate solutions in a comfortable, and fun environment. It’s designed to mimic the mechanics of speed dating in that you move from table to table and meet new people in the process, but unlike speed dating, where your goals are romantic in nature, inquisitiveness takes the lead at SpeedLURNing.
This year’s event was a success - it was attended by nearly 100 friends, colleagues, and supporters and was graciously hosted by our friends at the Little Tokyo Service Center, at a site they plan to redevelop into a recreation center for local youth. The focus of this year’s event was property ownership. We decided on this theme because it is a topic that continues to find itself at the center of some of Los Angeles’ most pressing issues. When we read about low-income residents becoming displaced due to rising housing costs, or learn about new development projects that fail to take into account the needs of the communities in which they are located, or unabashedly exploit local culture and traditions, it’s difficult to envision the right solution for everything. At LURN, we are always reminded that among the multiple ways to address these problems, there is one option which may help:
It is difficult to get displaced if you own the home you live in; property ownership increases your odds of positively building wealth. Yet, it is becoming harder and harder to own property. For these reasons, we decided to bring a lot of smart people into one room, provide drinks and food, and ask some questions!
Topics from SpeedLURNing!
We framed our questions through categories that we feel are actionable steps related to programs or policies. Furthermore, we asked our guests to work in groups to provide five responses, ranked by priority. The following is a summary of all responses and our analysis for each category:
1. Policy and Innovation: What types of policies should exist to help increase the opportunities for low-income individuals to own real estate in Los Angeles? What creative models have you seen that facilitate access to property ownership?
Most groups, in their top responses, mentioned or included some reference to Community Land Trusts (CLTs) or some kind of cooperative ownership model (tenant co-ops, specifically). As a matter of policy, municipalities may help lead the development of CLTs or cooperative ownership models or may step in and provide support once these initiatives have self-organized. CLTs for example take form via independent, nonprofit corporations. Thus cities may incentivize or support the development of CLTs by providing essential resources such as legal and programmatic support services to help incubate CLT organizations. Cities may also develop policy that gives land to CLTs that meet specific housing demand criteria as opposed to developing housing opportunities through traditional, restrictive covenants.
We noticed an interesting dynamic in the policy and innovation responses which can only be summarized as regulation vs. incentives. There was, a roughly equal split in recommendations that favored imposing regulatory policies associated with housing affordability OR policies that provided incentives with the hope of stimulate market forces in a “better” direction. For example, some of the more restrictive recommendations included “restrict foreign investment of single family homes,” and “limit prices on small lots.” As for incentives, recommendations included, “reduce interest rates to incentivize residents to buy property” and “flexible credit score policies.”
2. Funding: What types of programs exist to help people own property? What do you think is missing? (Be creative!)
In our “funding” responses, a lot of interest was paid to micro-finance options. A majority of the responses shared one common theme - a desire to move away from standard loans, such as 30 year mortgages. Many of our guests identified that the biggest funding-related issue in property ownership is the upfront capital needed to begin the process. How can people acquire enough for a substantial down payment on a property? Thus many of the responses suggest the notion that special grant and micro-loan programs should be available to fill in upfront capital gaps. Also popular in the “funding” responses were “First Time Homebuyer” (FTBs) programs. Not only did several guests mention FTBs, but they also recommended that FTB guidelines need to be more flexible in order to capture a wider base of customers.
We cannot agree more with the idea that current capital offerings, whether they are for personal or commercial uses, fail to support individuals who do not meet traditional requirements like having a high credit score and number of active lines of credit. We see this problem extensively in our work with small businesses, which is why we created two different funds to invest in small businesses in low-income neighborhoods.
The “cooperative” theme also emerged in the “funding” responses. Some guests believed that expanding property ownership to more people could be done shared ownership structures and lending circles. We know that families often pool resources informally and it typically results in positive outcomes. The question then becomes - can we formalize these practices into our social and financial systems to encourage more individuals to work cooperatively to build assets? What resources are necessary, beyond education and awareness?
3. Culture: What can those that purchase real estate do to support the preservation of the neighborhoods they will now call home?
In seeking insights regarding “culture,” in relation to property ownership, our goal was to better understand how individuals that attain property in new (to them) neighborhoods can do so respectfully and ethically. We asked this questions because despite mounting efforts to abate displacement and gentrification throughout Los Angeles, some people remain tone deaf to raised concerns. The top responses for this section can be categorized as “investments.” Most responses called for new property owners (individuals or corporations) to invest in neighborhoods beyond the properties they are purchasing. These calls for investments are both monetary and social in nature. For example, some guests recommend that new property owners contribute to special funds that can be used for neighborhood resources (such as the affordable housing trust fund LA City currently operates) while others were much more simple and direct - “don’t be assholes” to your new neighbors. They also suggest that you share knowledge about attaining property and to participate, genuinely, in neighborhood political and advocacy efforts that push for supporting disenfranchised individuals.
In addition to investments, many of the responses also called for, what we categorize as, “compromises.” These are very direct asks of property owners which may be self-imposed or could be supported through actual regulations. Example of these “compromises” include restricting/preventing property owners from “flipping” property, restricting/preventing new property owners from evicting tenants for a certain period of time, and increased efforts to maintain the well being of renters in their neighborhoods.
In short, the responses in this section largely conveyed a few simple notions: new property owners need to accept that they are new and moving into neighborhoods with well established histories and traditions that they should make an effort to understand and preserve.
4. Barriers: What are the biggest challenges that keep individuals or small business entrepreneurs from owning real estate?
The most prolific responses in the “barriers” section dealt with (lack of) access to capital. Although the most represented barriers were about people simply not having enough money or access to money to purchase property, many of the responses also corresponded with some of the themes discussed in previous sections. For example, several responses fall into a theme of “readiness.” Many people believe that individuals are not prepared to interface with the institutions that monitor the gates to property ownership - we can’t say that we disagree. Some of this may have to do with the need for financial education and some of this, as our guests astutely identified, may have more to do with the institutions themselves. Another major theme that emerged out of this question we classified as “institutional.” Our guests described the complex forces that intentionally and unintentionally create barriers for individuals when it comes to attaining property. These “institutional” forces relate to the the policies of lenders andwhy certain individuals do not have the resources necessary to navigate the world of property ownership.
5. Community Engagement: What can city government do to facilitate access to real estate ownership? What can community organizations do better to engage potential buyers?
Top responses for this section called for deeper levels of integration between community interests and formal plans and procedures. For example, several of the top responses recommend that local government develop task forces and other government entities solely for the purpose of collaborating with residents. One response recommended making systemic engagement, related to aspects that promote property ownership for underrepresented residents, a required component of Los Angeles’ general plan.
Another trend that emerged in the Community Engagement discussion is “Funding.” Simply put, many responses recommended that local government not shy away from investing significant resources in conducting thorough and extensive community engagement. Although the recommendations varied widely as to what type of engagement is best (local government collaborating with community organizations versus developing entirely new systems to work more directly with residents) the desire to see more resources invested in communicating with residents rang true in every trend and category associated with Community Engagement.
Based on the information gathered through this event, it is clear that we (all of us involved in this work) need to (and can) do any of the following:
Get more money into the hands of people that do not fit within the traditional units of financial and credit measurement. Perhaps there are better debt capital ideas worth exploring? Maybe one solution is augmenting Earned Income Tax Credits? Several responses alluded to lending circles - are communities aware of programs that coordinate these activities? MAOF, for example, launched a lending circle in Los Angeles in 2016. Community engagement/outreach appears to be a major component of this first point; people need to better understand what exists and we need to determine whether they are ready, or not, to take advantage of existing and non-existing tools.
Create more supply to meet ownership demand. Perhaps we can do more to better align development with sustainability goals so that development processes are more streamlined? Other possible solutions involve reforming our tax code so that more property tax is returned to municipalities willing to build higher-density forms of housing.
Research and implement cooperative models for property ownership. Many of the responses recommended Community Land Trust (CLTs) as possible solutions to the scenarios we posed. We definitely believe they’re worth exploring and investing in, as well as shared equity ownership models. In considering these models, we think it’s important to determine how ready are our communities to participate in such models. Taking advantage of these models also heavily relies on many of the aspects we described in previous points.
You’re going to see a few new things coming from LURN. Without divulging too many details, later this year we will release findings on some deeper research we have been working on related to property ownership paired with some of the above recommendations raised at this year’s SpeedLURNing.Thank you to those of you who joined us! If you weren't able to come you can check out our Facebook photo album, here! If you have any questions, or want to get more involved, hit us up! You can contact Luis at Luis@LURNetwork.org.