Our resale formula is designed to allow the homebuyer to build equity in their home while also keeping the home affordable for future generations. Specifically, we use a 1.5% compounded yearly maximum possible price increase. By compounding annually, it rewards those who keep their homes the longest.

Please notice that this is the maximum possible price increase and is not guaranteed. This price could also be affected by any ‘Repair Reserve funds’ used or ‘Capital Systems replaced’ or any ‘Qualified improvements’. The ground lease gives more information on these situations.

While 1.5 percent may not seem like a huge return, it yields a nice return when added to the fact that you are buying down your amount owed over time. Let’s look at a very simplified example.

How much could a buyer sell their house for if they were to buy a CLT home for $350,000 and sold it after 7 years.   The math goes as follows:

Sales price $350,000
fixed rate 1.5%  compounded annually
num years 7
max resale $388,446 cap and not a guarantee
0 minus any Repair Reserve funds used
0 plus any credit for Capital Systems Replacement
0 plus any credit for Qualified Improvements
$388,446 Final Total Maximum Sales price

In this example the home owner could sell their house for $388,446 after 7 years.

Now how much money would they walk away with in this situation.  Their mortgage rate was 5% with a 3% downpayment:

Initial sales price $350,000
down payment $10,500
mortgage rate 5%
num years 7
principal paid -$40,927
still owed $298,573
Equity when owner sells: $89,872

So the CLT homeowner buys a home for $350,000 and seven years later sells it for the possible maximum amount of $388,446 which gives them a profit of $89,872 upon sale of the CLT home (this is a simplified example; actual numbers may vary due to closing costs and other factors). The majority of CLT homeowners then take this money and are able to afford a market-rate home.

In 2023, your monthly mortgage payment would roughly be equal to a corresponding rental payment. However, during the 7 years, the renter has to deal with potential rate increases and the possibility of being forced to move. The renter ends up with $0 at the end of the period. The CLT homeowner ends up with (up to) $89,872 at the end of the same 7 years.