The Limits of Limited Equity Cooperatives: Opportunities and Obstacles to Increasing Black Homeownership and Decreasing the Racial Wealth Gap in Washington D.C.

ABSTRACT

This paper focuses on recent governmental initiatives in Washington, D.C. to bolster the long-term physical and financial viability of its limited-equity cooperative housing stock. Drawing on in-depth interviews with members of the DC Limited Equity Cooperative Taskforce, it interrogates the relationship between recent municipal housing policy and the growing asset-based racial wealth gap. The findings indicate that limited-equity cooperatives provide myriad benefits to their residents, yet ultimately fail to curb systemic limitations on black wealth in the property market and rectify historical patterns of racial disparity in the distribution of governmental resources. This paper argues that policy makers must proactively assess how new models of shared equity homeownership affect or even perpetuate racial disparities in wealth and continuously interrogate the structural impacts of affordable housing policy on the (re)distribution of resources in urban centers.

KEYWORDS:

• Limited-equity cooperatives
• racial wealth gap
• critical race theory
• Washington, DC
• affordable housing

Acknowledgment

I thank my advisors at the LSE who supported my research at its earliest stages, as well as the editors and reviewers for their invaluable advice on this piece.

Disclosure statement

No funding or potential conflict of interest was reported by the author(s).

Ethical review statement

This study has undergone ethics review by the LSE Research Ethics Committee in accordance with the LSE Research Ethics Policy and Procedure. The institution that undertook the review was the London School of Economics. LSE does not issue specific approval numbers for this review. All research subjects were given detailed information about the study and the permissible uses of the data they provided and were required to provide written signatures on informed consent documents prior to their participation in the study.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1. Fewer than 1% of equity-building government mortgages went to black families between 1930 and 1960 (Kijakazi et al., 2016).

2. Between 2000 and 2010, median single-family home prices increased by 170% and the stock of affordable rental housing was cut in half (Howell, 2019).

3. This money will be allocated in the form of a grant to a financial institution with a three-to-one matching requirement, creating a final loan pool of $20 million.

4. Some recent scholarship has focused on the success of asset-building interventions, such as matched savings, incentivized savings, and even universal basic income programs in which public resources are aimed directly at an individual’s financial stability, as opposed to housing-specific interventions such as LECs, where public resources are used to create market distortions that open access to homeownership for low-income individuals (McKernan et al., 2020).