The gift of equity: a new model for donors?
Her friends thought she was crazy. We thought, is this for real?
Most people who support affordable housing make a financial donation, volunteer with a non-profit working in that space, or advocate for policy change. A donor we’ll call Sarah took a different approach.
Sarah disclosed during the phone call that she wanted to donate a brand new 2 bedroom, 1.5 bath home in West Asheville. More specifically, she wanted to donate a considerable amount of equity. Asheville Habitat purchased the home for just one-third the market rate, which was far less than our cost to construct a comparable Habitat house. A buyer that qualified for our affordable homeownership program will purchase the home and pay an affordable mortgage, not to exceed 30% of monthly income.
The Million Dollar question: why would Sarah sell this brand new home to Habitat for a third of its market value rather than sell it on the open market and make a profit?
Well, “millions” is part of the answer. The average house price in the City of Asheville is now over $500,000 – half a million dollars. The most expensive house ever to sell in the region went for $9.6M million recently. And the $34M “summer home” mansion has garnered a lot of press. These exceptionally high-end homes are at the far end of the housing spectrum, but they do affect the lower end, which is now unaffordable to most people who live and work here.
Sarah makes a good living as a physician, and volunteers in the medical community, too. When she is passionate about a cause, she is all in. She makes a difference, one person at a time. While most people would simply sell, rent, or maybe even sell the house and donate some of the profit to a non-profit, such a standard approach felt insufficient. In her professional and personal life, she has witnessed unequal access to many things – healthcare and housing, most notably. There is a lot of gentrification in the Burton Street community and other African-American Legacy neighborhoods. Sarah tries hard to be involved, to be part of the solution, to do more.
“Discussions about reparations nationally and locally inspired me to reflect on my many unearned privileges. I realized I had more than I needed and felt driven to redistribute wealth more equitably in my community. Habitat’s commitment to helping families navigate the many barriers to homeownership in our society, including lack of affordable housing stock, inability to access a mortgage due to strict credit requirements, and daunting down-payments/closing costs, is really inspiring. I know that each family who builds a home with Habitat will access the powerful tax-incentives of homeownership, capture the growth of their asset over time, and be on a path towards financial security for their family through intergenerational wealth-building.”
Perhaps this gift of equity is a one-time thing for Asheville Habitat. Maybe the gift of equity will be a new model for donors. Regardless, we are grateful for Sarah’s generosity and “outside the box” thinking. We hope her story inspires others to think creatively when it comes to supporting affordable housing and programs that increase equitable access to housing in our community.