Housing trust funds are separate funds established by states or localities to provide a stable source of revenue reserved solely for affordable homes. Because they are created at the state or local level, program activities and eligibility requirements vary from place to place in response to local needs and priorities.

By definition, housing trust funds are associated with a dedicated funding source -- i.e., a stable source of revenue that will continue to provide resources on an ongoing basis without the need for annual appropriations decisions. However some communities maintain local accounts that are reserved for affordable housing but are not connected to a dedicated revenue source. While these programs do not benefit from the reliable funding conferred by a dedicated source, they can play an important role in addressing local housing needs.

While housing trust funds can be tailored to meet the needs of communities with a variety of housing conditions, they represent a particularly important policy to consider in a hot housing market. Certain types of dedicated funding sources for housing trust funds -- notably, real estate transfer taxes, linkage fees and document recording fees -- generate more revenue for affordable housing when there is an uptick in housing market activity and when homes prices increase. For this reason, housing trust funds that rely on these or other similar funding sources can help communities to harness the power of hot housing markets to raise funds for affordable homes.

Click here to learn more about housing trust funds. Please note that you will be exiting the Capitalize on Market Activity strategy and moving to the Generate Capital strategy, which contains our overview of housing trust funds. Click here to learn about other policies that capitalize on market activity.