A company that helps educators buy homes in high-cost communities has “landed” in Hawaii with a $25 million bankroll envisioned to help improve chronically poor public school teacher retention.
San Francisco-based Landed is kicking off its program, described by backers as innovative, after working with a local business executive organization and the Hawaii Community Foundation.
Landed invests in home purchases with educators by providing up to half of a standard down payment on a home, with a limit of $120,000, in return for repayment of that contribution in the future along with a sum totaling 25% of any gain or loss in value.
“It’s a shared investment in the home,” said Alex Lofton, Landed’s co-founder.
Local business leaders and government officials said affording a home in one of the priciest markets in the country is one reason why many teachers leave Hawaii every year.
Terry George, president and CEO of the Harold K.L. Castle Foundation, noted that the state Department of Education had to fill 1,200 teacher positions this year, up from 1,000 last year.
“We know the cost of living is one of the issues,” he said. “Obviously, we need to do something about this.”
George, a member of the Hawaii Executive Conference, was among leaders in the organization who announced Landed’s Hawaii expansion Tuesday at Hawaii Community Foundation’s downtown Honolulu headquarters.
Jack Wong, Kamehameha Schools CEO and co-chairman of the executive conference’s education committee, added, “Teachers with stable housing are more likely to stay in the classroom and help schools recruit and retain high-quality teachers.”
Christina Kishimoto, state schools superintendent, welcomed Landed’s program. “The dream of homeownership is something that we need to make a reality for our teachers, and all of our educators, so that we can protect the capacity that we need to have great schools in Hawaii,” she said.
Gov. David Ige also participated in the announcement and said addressing affordable-housing challenges is something public and private sectors can work together to accomplish.
The Hawaii State Teachers Association said it welcomes efforts to help teachers afford homes but questioned how much impact Landed can make.
“The HSTA welcomes any effort to help educators, however this option may only work for a very small percentage of our members,” Corey Rosenlee, the union’s president, said in a statement. “We will continue to fight for better wages and benefits to ensure teachers don’t need financial assistance to afford a home.”
Lofton said Landed has helped almost 200 educators in five markets — the San Francisco Bay Area, Los Angeles, San Diego, Seattle and Denver — buy homes collectively valued at $100 million since the company was founded in 2015.
Landed typically receives initial interest from 3% to 5% of teachers in the markets it serves, Lofton added. The company is providing information on how to apply at landed.com and meetings at eight Hawaii schools from May 13-17.
The DOE has 42,000 employees, including 13,000 full-time teachers.
Teachers and staff employed by DOE for at least two years are eligible for the Landed investment, which has a 30-year term. Within the 30 years, Landed requires that its investment be repaid through refinancing, selling the home or some other means.
Landed is working with four mortgage lending partners in Hawaii: First Hawaiian Bank, Bank of Hawaii, American Savings Bank and Central Pacific Bank.
Under Landed’s program a homebuyer can obtain half of the standard 20% down payment for obtaining a mortgage on a primary residence.
Using the $420,000 median resale price for Oahu condominiums last year, a 20% down payment would be $84,000 with Landed providing $42,000. If the owner later sold the condo for $520,000, they would pay Landed its $42,000 back plus $25,000 representing 25% of the appreciation, leaving the seller with a $33,000 gain. If the property declined in value, the seller would have to pay Landed $42,000 plus 25% of the loss.
The median price for previously owned single-family homes on Oahu last year was $790,000. Landed’s $120,000 maximum contribution could allow someone to buy a $1.2 million house.
Lofton said there is no fixed limit to how many educators Landed can help, given that it has raised $25 million from investors and continues efforts to raise more.
Juan Espinal, a 29-year-old Konawaena Elementary teacher on Hawaii island, moved to Hawaii from New York seven years ago through the Teach for America program and has economized his living arrangement by renting a four-bedroom house with five other people, including three other teachers who share the $2,600 monthly rent, which is being raised to $2,800 this summer.
Espinal said he’s not sure Landed’s program is for him. But he wants to own a home.
“I would love a home,” he said. “I want to be a real part of the community.”