A San Francisco-based company that offers down payment assistance to public school teachers looking to purchase a home has entered Hawaii in a partnership local business and education leaders hope will help retain teachers.

Landed Inc., founded in 2015, has formed partnerships with school districts in the San Francisco Bay Area, Los Angeles, Seattle, Denver and San Diego. Its model is based on helping teachers in high-cost areas stay in the communities they serve by helping with a down payment in exchange for a share in home appreciation down the road.

The Hawaii partnership was unveiled Tuesday at the Hawaii Community Foundation offices in downtown Honolulu.

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“What do we do? We help educators buy homes in expensive places so teachers and staff of schools can continue to commit to their communities,” said Alex Lofton, the co-founder of Landed and the son of a fourth-grade schoolteacher, during the press conference.

The company has so far helped 200 people purchase homes in the metropolitan areas it currently serves, amounting to more than $100 million in home investments. Landed has raised $25 million in total investment, including $5 million from the Chan Zuckerberg Initiative, according to the San Francisco Business Times. Facebook CEO Mark Zuckerberg and his wife own more than 700 acres of land on Kauai.

Landed generates revenue by receiving part of sales commissions from real estate agents representing homebuyers, according to this detailed Education Week article describing how the process works.

Exploring a potential partnership first happened during discussions at the 2018 Hawaii Executive Conference, an annual gathering of CEOs and business leaders here and globally, but talks really got underway in February, when Landed representatives came to Hawaii and met with different community organizations, according to Micah Kane, the CEO and president of Hawaii Community Foundation.

“We want to give those individuals who are considering becoming teachers some confidence that there’s tools to help them thrive here when they do go into that industry,” he said. “This program specifically is about supporting those who have at least two years of tenure in Hawaii. We really are focused on teacher retention but it will definitely help as a recruitment tool.”

High Home Prices, Higher Teacher Turnover

Hawaii lost 1,300 teachers last year, with at least 500 leaving Hawaii for the mainland due to the high cost of living in Hawaii. The average teacher salary in Hawaii is $57,000, which ranks 18th in the nation, but drops to dead last when adjusted for cost of living, according to one analysis. The median average price of a single-family home on Oahu is $810,000 and median price of a condo is $427,000.

The Hawaii Department of Education does not track data on how many of its 13,700 teachers statewide own homes. But the inability to own a home or condo here is a widespread issue among many young professionals, teachers included.

“I have anecdotal data: they’re constantly saying it’s difficult to live in Hawaii, own here, and be able to plan for their family’s future and that’s what they’re most concerned with,” said school superintendent Christina Kishimoto in an interview after the press conference, which featured remarks from Gov. David Ige and business leaders.

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Landed’s model is based on a premise called shared equity. In this case, the company will provide half a down payment of up to $120,000 per family, in exchange for a 25% share in appreciation or loss when the home is sold or refinanced after 30 years.

The arrangement is available to any teacher, administrator and support staff member who has worked at a Hawaii public school for the last two years and is committed to continue working at a Hawaii public school for the next two years.

The house they’re looking to purchase must be a primary residence, although candidates need not be first-time homeowners. Participants must qualify for a primary mortgage with one of Landed’s four main lending partners: First Hawaiian Bank, Bank of Hawaii, American Savings Bank and Central Pacific Bank, and also contribute a 10% down payment.

A down payment of at least 20% helps homeowners avoid private mortgage insurance and lowers monthly mortgage payments.

Earlier this year, Landed received approval from Fannie Mae, the government-sponsored enterprise, to become an official federally conforming down payment assistance program, said Ian Magruder, Landed’s director of partnerships who helped manage the Hawaii launch.

Magruder said the questions the company gets the most from potential participants is on the appreciation-sharing and other cost-benefit analyses.

“Oftentimes they find out once they look at their finances, paying private mortgage insurance on top of a bigger loan just increases the monthly costs, so Landed ends up being a better deal,” he said. “But it’s up to each teacher to look at the numbers themselves and decide.”

The company is partnering with Hawaii Community Assets, a nonprofit HUD-approved housing counseling agency, to provide free homebuyer education and pre-purchase counseling to teachers who are contemplating the program.

Corey Rosenlee, president of the Hawaii State Teachers Association, which has pushed for higher teacher pay, cautioned that teachers “will have to do their homework” when it comes to exploring this arrangement.

“The reality is, teachers have to be able to earn salaries so that they can afford a home,” he said. “There were housing bills in the Legislature (this session) and all of them failed.”

Landed is planning a series of eight informational sessions at various high schools around Hawaii to answer questions from teachers. The talk story sessions are scheduled to take place at the following schools on the following dates. The sessions will all be held from 4 p.m. to 5 p.m.

Monday, May 13: Kauai High School

Tuesday, May 14: Farrington High School and Castle High School

Wednesday, May 15: Mililani High School and Kapolei High School

Thursday, May 16: Maui High School

Friday, May 17: Konawaena High School in Kona and Waiakea High School in Hilo