In this new neighborhood, none of the homeowners own the land

Laura Soto, 38, sands several planks of wood that will serve as the trim for the outside of her new home. A few feet from her lies a plank of wood labeled “front porch,” another labeled “door.” On a break from working, Soto talks color palette.

“The trim will be the rich white, the outside of the house will be darker gray and the door will be a lighter gray, and there will be an accent wall of a grayish-blue color,” said Soto.

Soto, a mother of three who earns roughly $39,000 a year as a medical assistant, will soon be a first-time homeowner. For $150,000, she’ll purchase the first of 67 homes in a neighborhood built by Habitat for Humanity in Northeast Austin.

In a city where the median home value is $305,510, that’s a steal.

Soto is buying a home in what will be the state’s largest community land trust, a model where a nonprofit or a municipality owns the land a home sits on. In this case, Austin Habitat for Humanity will own the land. The city and several nonprofits currently run community land trusts throughout the city.

“Instead of your typical situation where the homeowner would come in and buy both the home and the land underneath the home, here the homeowner comes in and buys the home,” said Eliza Platts-Mills, a professor at the University of Texas School of Law. “But they don’t buy the land.”

Soto will pay roughly $25 a month to rent the land beneath her three-bedroom home. She’ll pay taxes on the house and the land rental fee. Should she choose to sell the home, rules dictate who can buy that home and at what price.

“The homeowners can’t turn around and sell the home to whoever they want at whatever price they want,” said Platts-Mills.

State law requires that community land trust homes be sold to families making 80 percent of the median family income in the area, or $65,100 for a family of four in Austin. (There are some exceptions to this rule.) Habitat for Humanity is lowering that to 60 percent of the median family income, or $48,850 for a family of four.

That same law also restricts increases to the home value year over year. In Soto’s case, the value of her home will increase by 1.5 percent each year. That means Soto won’t get to cash in on her investment in the way that many homeowners can in Austin, as home and land values skyrocket in the city.

“It’s certainly not the (usual) unfettered access to the market appreciation, but the reality is that we couldn’t do that and keep the homes affordable for the next buyer,” said Wayne Gerami, vice president of client services at Austin Habitat for Humanity. “We’ve really shifted to prioritize affordability for the community more than wealth creation for individual families.”

When she’s ready to move into her new home early next year, Soto will have put in nearly 300 hours of building time with Habitat for Humanity, something the nonprofit calls “sweat equity.” She will also have spent 30 hours in a class aimed at helping first-time homebuyers plan their finances.

Soto currently pays $1,300 a month to rent a house in Austin. She estimates the monthly mortgage on her new home will cost her nearly half that, roughly $760 a month. Her commute, she said, will remain the same.

“I’m very, very excited and very fortunate to have this opportunity,” said Soto.

This story was produced as part of the Austin Monitor’s reporting partnership with KUT. Photo by Gabriel Cristóver Pérez/KUT News.

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