With median house prices in Snohomish County hovering just under $500,000, according to Zillow, the hefty price tag requires some Everett and Mukilteo teachers, whose salaries start at $54,677 and $58,481 respectively, to save for years for a down payment.
Landed, a San Francisco-based startup, wants to help cut that time by chipping in half the down payment for teachers and employees in the two school districts. In return, participants would then share in any future profits or losses. The program is also being viewed as a way to recruit and retain staff as housing costs skyrocket in the county.
Teachers and other employees, including classified staff, who have been with the Everett or Mukilteo districts for at least two years are eligible for the down-payment assistance.
“We were intrigued because their primary focus was helping educators,” said Randi Seaberg, director of talent acquisition and retention for the Everett School District. “We’re looking for opportunities for employees or potentially employees to live in the same communities in which they work.”
Even though Everett teachers are pretty well compensated, home ownership is still out of reach for many, Seaberg said.
How it works: Landed provides half the down pay, up to $120,000. Participants then have 30 years to repay that money. And they would also be required to give Landed 25 percent of any profits — but if the home loses value, the company would also share in the same percentage of any losses.
For example, if a teacher wanted to purchase a $500,000 home, Landed would provide $50,000 for half a $100,000 down payment, with the buyer kicking in the other portion.
When the teacher or other school employee is ready to sell or buy out Landed, the portion of the down payment provided by the company would be repaid, in this case $50,000.
If the house appreciates by $100,000, the teacher would have to payback a total of $75,000 to Landed — $50,000 (the down payment borrowed) plus $25,000 (a quarter of the gains). But if the house loses value, depreciating by $100,000, the educator would repay $25,000 — $50,000 (the down payment borrowed) minus $25,000 (a quarter of the losses).
“We are a true co-partner, we share on both sides — gains or loss,” said Ian Magruder, head of partnerships at Landed. “Unless you have a substantial sum of money saved up, it’s hard to get into the housing market.”
The Bay Area company was co-founded by Alex Lofton, a former student of the Bellevue School District and a son of an educator. Launched in 2015, Landed has since partnered with 80 schools in California and the Denver area.
“How do people afford to buy in increasingly expensive cities?” Lofton said. “Especially people that keep our cities running.”
Last October, the company began offering down payment assistance to employees of the Bellevue School District. The company is focusing on areas with appreciating markets, Magruder said.
In Snohomish County, the program is open to teachers and staff who have been with the Mukilteo and Everett school districts for at least two years. Participants are asked to work in the district for another two years.
“You can buy whatever type of home you want, and whatever area within a reasonable distance from their school,” Magruder said.
The home has to be used as a primary residence and cannot be a mobile home.
The company has met with several school districts in the county, Magruder said, and the Everett and Mukilteo districts were the first to express interest.
Money to provide down payments comes from social impact funds managed by the company. Repayments from participants are reinvested in the program, which Landed hopes to eventually expand to include nurses, firefighters and police officers. To keep the lights on, Landed shares in a portion of the brokerage fees.
“It’s really in our interest to not have defaults,” Magruder said. “That’s one of the reasons we love to invest in educators, because they tend to be responsible homebuyers.”
Landed also offers financial coaching for employees who aren’t quite ready to purchase now but want to prepare to do so in the future.
“It’s very low risk for the school,” said Seaberg, the Everett School District recruiter. “There’s no financial obligation with the school district.”
He said that Landed could help the district retain its staff.
“If someone is living in the community they are working in, they are just that more committed to our schools and students,” Seaberg said.
Employees in the Mukilteo or Everett school districts, would this program allow you to buy a house sooner? Tell me why or why not — I can be reached at 425-374-4165 or firstname.lastname@example.org.