Zero Subsidy Affordable Housing
DESCRIPTION
This project is based on the idea that if people could buy only a percentage of the appreciation value that they can afford, and still secure stable access to a home, up to half of homelessness in dense urban regions could be prevented. Home buyers today buy 100% of a home at the time of purchase,and borrow money through a mortgage to be able to afford to do so. But this purchase masks the fact that they are buying two things at the same time- 100% of the future sale price of a home (so-called appreciation value), and 100% of the usage rights of that home while they are living there (so-called use value). If people could buy only the percentage of appreciation value that they can afford, and still secure stable access to a home, half of homelessness in dense, coastal urban regions such as the Bay Area, New York, Seattle could be prevented.
ACCOMPLISHMENTS
Our team has reviewed several financial theories, and the Stanford University model of providing zero-subsidy affordable housing for off-campus professors to develop a financial model. One of the theories reviewed was how publicly traded holding companies can use accretion, dilution and stock swapping to secure private assets through creating access to liquidity and diversification. Our team has also reviewed how liquidity and diversification can support the subsequent achievement of housing access. If zero-subsidy affordable housing was at scale, then anyone who could buy one-quarter of a home’s appreciation value in locations such as the Bay Area, Seattle, NYC, and secure access to stable housing. The financial model would replicate the theories studied and demonstrate the feasibility of the homeless prevention thesis. Our team has reviewed how publicly traded holding companies can use accretion, dilution and stock swapping to secure private assets by creating access to liquidity and diversification. Our team has reviewed how liquidity and diversification in phase one can support the achievement of housing access in phase two. If zero-subsidy affordable housing was at scale, then anyone who could buy one-quarter of a home’s appreciation value in a high growth, coastal, high inequality city could then secure access to stable housing.