How USA Land Trust Homes are Building Wealth While Keeping Homes Affordable in the North End of Hartford

by Julia Boucher & Gabbie Marcuccio

Last updated on December 2, 2024

for Data Visualization for All
with Prof. Jack Dougherty
Trinity College, Hartford CT, USA

Introduction

As a working-class Hartford resident in 1995 it isn’t easy to choose whether to rent an apartment or buy a home. But let's imagine two separate residents, one renting and one buying - how much wealth have they created through the years? But what even is homeownership wealth? Homeownership can easily create wealth through monthly payments towards your mortgage which decreases your debt, alongside things done to your home like repairs or design aesthetics which increases the value of your home. This wealth grows from your homeownership and it eventually pays off.

We wanted to explore this idea of homeownership wealth and what it really means in Hartford, CT by using an affordable housing program as a standing point. The Center for Leadership and Justice is an organization that works in the greater Hartford, CT area that responds to different issues brought up in the community. They have created affordable housing units - one of their subsidiary organizations is Urban Suburban Affordables (USA) which is a partnership with the Connecticut Department of Housing. USA purchased the land for homes through Hartford and neighboring areas. It allows low-income families to purchase a home and enter a ground lease with the program. A ground lease is an agreement in which a tenant is allowed to develop a piece of property during the lease in which the land and improvements are given to the property owner. Through this ground lease, low income families are able to buy and keep a house which creates affordable homeownership.

We worked with this organization’s data to answer the overarching question: How much homeownership wealth has been created by the USA program? So how does homeownership wealth play into the USA program? Houses are being bought and owners are paying and caring for them, making wealth - but how much wealth has this program created? Most low-income people are renting because they can’t afford houses, however, the USA home program keeps homes affordable for low-income buyers while also generating wealth, which benefits entire communities rather than just individual owners. In our findings, we therefore begin by comparing housing costs among the typical renter, the regular home owner, and the USA homeowner. We then examine wealth creation among a sample of median value USA homes in the North End of Hartford, based on USA’s allowable resale price procedure, to illustrate how USA homes generate wealth while keeping homes affordable for low-income buyers.

Findings

Part 1: Building Wealth as a Low-Income Renter

In order for us to properly look at homeownership wealth and how much the USA program truly created, we need to look at other examples that aren’t in the program. We compiled four different homes that are in the USA program as well as two homes not in the program but in similar areas and price ranges as well as average prices for renting in Hartford. By using the mortgage calculator and estimates on Zillow (as of 11/19/24) we compared the monthly payments through this interactive chart below by taking the median price.

From looking at this chart, we can learn that buying overall seems like a better option. This shows that low-income families would rather buy but might not be able to because of how expensive it can be upfront. By comparing these prices we can see how this is good news for low-income families who usually rent because they will be paying the same amount that they would usually pay for renting but they will own a house and generate wealth.

But looking at the monthly payments alone won’t answer how much wealth has been generated - it just allows us to understand how the USA program creates affordable homeownership. We decided to look at the prices of homes 30 years ago and then today in order to compare the USA homes and non-USA homes. By looking at this interactive chart below it allowed us to visualize just how much wealth has been generated. The lighter green shows the amount generated on top of what the house cost originally.

Part 2: Building Wealth as a USA Home Owner

After determining that owning a home was a better and more affordable investment long term than renting was, we then began evaluating wealth created as a USA homeowner compared to an average buyer.

In order to evaluate and visualize wealth created by homes owned on USA land trusts, we first selected a sample of 4 median-value homes, focusing specifically in the North End of Hartford. From our data of USA homes located in Hartford, we calculated the median current market value to be about $235,000, based on Zillow estimates from 11/17/24. We then selected our sample to represent various zip codes and census tracts in the North End, and based on proximity to the calculated median home value. We chose two homes from zip code 06120 and two homes from zip code 06112, and each home was located in a different census tract (5244, 5240, 5039, and 5040). The chart below visualizes the current estimated market values of our sample homes in relation to the median value.

The estimated market values of our sample range from about $215,000 to about $250,000, based on the median of $235,000. Since the USA program was started in the 1990s, we ensured that the homes in our sample had original sales data going back to the year 2000 or earlier, with their original sales prices ranging from about $65,000 to about $74,000. The following interactive map visualizes where each of our four sample homes are located in the North End of Hartford. On the map, each square symbol represents a home, and hovering over a home shows its house code, zip code, census tract, and Zillow estimated current market value.

Since we were interested in seeing how much wealth could actually be generated by USA homes, we couldn’t simply compare current market values to original sales prices, because USA uses a specific procedure to calculate allowable resale prices for each of its homes. This procedure factors in data such as capital improvements, closing fees, land subsidies, and appreciation, in addition to original sales price and current market value, to ensure that owners are still able to make a profit from their home sale. However, since the USA allowable resale price is always lower than the current estimated market value, these homes are able to remain affordable for other low-income buyers. In other words, USA homes help to generate wealth for the entire community, and makes homes affordable for several generations of buyers, rather than generating a maximum amount of wealth for a single owner.

Below is an example illustrating the breakdown of costs factored into the allowable resale procedure for USA homes, which can also be found in the pdf linked above:

Above is how the Center for Leadership and Justice calculate the allowable resale price. This comes directly from CLJ.

Additionally, the following interactive chart shows the original sales price, calculated allowable resale price, and current market value of each of our 4 sample homes.

Compared to their original purchase price, the value of all four sample homes increased, indicating that USA homes are a positive investment for buyers. More specifically, wealth generated based on the USA allowable resale procedure ranged between about $125,000 and $135,000 for each of our sample homes. Wealth generated just based on the current estimated market value ranged from between about $147,000 and $190,000. The difference between potential wealth generated and actual (allowable) wealth generated was therefore only about $22,000-$45,000.

Why it Matters

This program matters because it allows low-income families in order to buy a house without putting them into complete debt. It is important for us to understand why our question of homeownership wealth matters so people interested in the program (and the program itself) is able to understand how much wealth is being created and what they could do in order to create more wealth depending on where they want to go to teh program. It also allows families to see what path they should take that is best for them financially.

Sources and Methods

Selection and Visualization of Samples

In a google sheet, we used the previously gathered information from our class builds in the tab “data,” based on data from the Center for Leadership & Justice, and Zillow. We selected just the homes located in Hartford, which were also indicated by house codes starting with H. We copied the following data for these houses into a new tab in the spreadsheet titled “data hartford” : House Code, Zip Code, Census Tract, Address, Latitude, Longitude, and Zillow Estimated Market Value from 11/17/24. From this data, we calculated that the median market value of USA properties in Hartford was about $235,000.

We then imported this data into datawrapper and created an interactive symbol map showing where the homes were located in Hartford, using a polygon base map of Hartford that we created and imported from geojson. The map allowed us to visualize which homes were located in the North End of Hartford specifically, since this was the focus of our particular research question. Each home was represented by a circular symbol, and hovering over a home also showed its house code, zip code, census tract, and Zillow estimated market value.

Of the homes located in the North End, we chose our sample to represent various zip codes and census tracts, as well as based on proximity to the calculated median home value. We chose two homes from zip code 06120 and two homes from zip code 06112, and each home was located in a different census tract. When gathering our data from Zillow, we realized that the Zillow estimates regularly changed slightly, and we decided to update all of our Zillow numbers based on data gathered at once on 11/17/24. As a result, the estimated market values of our sample range from about $215,000 to about $253,000. We also ensured that all of the houses we selected had data going back to around 2002 or earlier so that we could track costs and values over time.

We organized the data for our sample in the spreadsheet tab “data for our story,” so that we could easily access it for making our visualizations. We then imported this data into datawrapper to create and annotate our visualizations.

USA Allowable Resale Price Calculations

As previously noted, data from Zillow in the tab “data for our story” is from 11/17/24. We used this pdf of the USA allowable resale price instructions and template to calculate the allowable resale prices of our sample homes. Based on the template, we gathered data on the most recent sales price, current estimated market value, and the estimated closing fee, agent commission, and closing taxes for each home from Zillow. Based on the template, the USA land subsidy of $10,000 and the USA transfer fee of $500 were fixed and remained consistent across each home. We used the template’s capital improvements value of $40,000 as the estimate for about 25 years of home ownership, and also kept this value fixed for all 4 homes.

Wealth Generated by USA homes vs. non-USA homes

In order to first understand how much wealth has been created by USA properties vs. non-USA properties, we first had to find the USA properties we wanted to use but also find non-USA properties to compare with. The homes we chose for the USA properties were in the Northeast corridor of Hartford which is also what we chose for the non-USA properties in order to have similar numbers and demographics. By comparing the houses that the Center for Leadership and Justice has and on Zillow, we found two houses similar to the others. Then in order to compare to renters, it was hard to find specific renting prices from 30 years ago so we used an average given to the state of Connecticut in 1998. And in order to understand how much an average rent costs now, we used the Zillow estimator. By having a stacked column chart, it made it easier to compare all of the prices through the different types of properties by using a monthly payment.

But in order to fully understand how much wealth has been generated, it is easier to look at the home prices themselves (with USA allowable resale prices) that have been inflation adjusted. We took the price that the house was sold for around 30 years ago and the price now which we put into a CPI Inflation Calculator so inflation wasn’t getting in the way of the amount of wealth generated. After inputting that into a google sheet we were able to put it into Datawrapper and create a chart that fully allows you to visualize how much wealth has been generated on top of how much the house was sold for 30 years ago which is why the area chart was the perfect use.

Sources

“Housing Initiatives.” The Center for Leadership and Justice (blog). Accessed November 24, 2024. https://cljct.org/what-we-do/housing-initiatives/.

Money. “Here’s Who Benefited the Most From Homeownership Over the Past 10 Years.” Accessed November 24, 2024. https://money.com/build-wealth-owning-a-home-study/.

Investopedia. “What Is a Ground Lease? How It Works, Advantages, and Example.” Accessed December 3, 2024. https://www.investopedia.com/terms/g/ground-lease.asp.