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Some Washington, DC, homeowners are choosing to sell their properties for significantly less than market value to preserve neighborhood affordability and combat displacement. Through initiatives like the Douglass Community Land Trust’s Pay It Forward program, sellers voluntarily forgo substantial profits to ensure their homes remain affordable for future generations. This model represents a conscious alternative to the speculative real estate market, leveraging community land trusts to create lasting community benefits.
The Pay It Forward Program is an initiative run by the Douglass Community Land Trust, a nonprofit organization. The program enables homeowners to sell their property below its appraised market value. The trust then resells the home—specifically the structure—to a new, income-qualified buyer. However, the land beneath the home is not sold. Instead, it is held permanently by the trust. The new homeowner enters into a long-term, renewable ground lease for the land, typically lasting 99 years. This separation of the home from the land is the key mechanism for controlling long-term costs. For properties like condominiums where land cannot be separated, a deed covenant (a legally binding agreement attached to the property title) is used to enforce the same affordability restrictions.
Gentrification is the process where rising property values and living costs in a neighborhood displace lower-income residents and change the area's character. In Washington, DC, this has been a significant challenge. By taking a home off the speculative market, the Pay It Forward program directly counters this trend. The resale price of the home is capped, making it accessible to buyers who would otherwise be priced out of the neighborhood. This ensures that the benefits of homeownership, which is a primary driver of wealth building in the United States, are available to a more diverse range of families, helping to stabilize the community's economic makeup.
Ed Lazere and his wife, longtime residents of DC's Brookland neighborhood, purchased their home in 1992 for $160,000. After three decades, the median home price in their area had soared to $830,000. Instead of selling on the open market for an appraised value of $950,000, they chose to sell to the Douglass CLT for $640,000. While this meant leaving an estimated $300,000 in potential profit on the table, they still realized a significant gain on their original investment. Their former home was then put under contract for $410,000, requiring an annual income of approximately $95,000—similar to what the Lazeres needed when they bought the home, adjusted for inflation. This decision ensured the house would remain affordable for a future family comparable to their own when they first moved in.
Sellers participating in this program make a deliberate choice to accept a lower sale price. However, there are some financial considerations. Based on our experience assessment, sellers do not pay a transfer tax (a tax levied on the sale of a property) on the transaction. Furthermore, the difference between the home's appraised market value and the actual sale price can often be claimed as a charitable donation on their taxes, potentially reducing their taxable income. It is crucial to consult with a tax professional to understand the specific implications. The following table illustrates the financial difference in the Lazere family's scenario:
| Financial Metric | Open Market Sale | Sale to Community Land Trust |
|---|---|---|
| Appraised Value | $950,000 | $950,000 |
| Sale Price | ~$950,000 | $640,000 |
| Seller's Profit (Approx.) | ~$265,000 (after inflation adjustment) | |
| New Buyer's Price | ~$950,000 | $410,000 |
| Income Needed for New Buyer | ~$187,000/year | ~$95,000/year |
This model is not about financial sacrifice but about redirecting unearned equity gains from gentrification toward a community benefit. Sellers typically participate because they are financially secure and wish to see another family have the same opportunity they did.
The Pay It Forward program is a powerful tool for homeowners who are motivated by community values over maximum profit. It is particularly suited for those who have significant equity in their homes, have their financial future secured (e.g., retirement is funded), and possess a strong commitment to anti-displacement efforts. This path is a tangible way to redefine home equity not just as personal wealth, but as a resource for community repair and stability. By voluntarily opting into this model, sellers help create a more inclusive housing market, one home at a time.
