You may know I’m fascinated by the topic of partial equity home ownership. I got to thinking about the topic again the other day after listening to the Real Estate — Ownership, Asset, Economy a16z podcast. (via Greg Fischer).
A few random, unorganized thoughts…
Where’s the fascination come from? Partial home ownership has the possibility of placing more people into homes — at (relatively) affordable prices. Monthly payments are of course not the barrier to home ownership; it’s the down payment.
Splitting up equity and making small percentages both possible and liquid, is something Point is working on. As a lender buying the equity directly, they are likely to run into trust issues quickly (I’m assuming they already have). There’s an incredibly high bar to cross prior to letting an unknown entity take an ownership stake in your home (just as founders don’t want random unknown/untrusted investors to own equity in their companies). I truly hope Point “platforms” the legal/financial instrument/technology and opens up a peer-to-peer offering, and/or enables existing financial institutions to use the technology to service their own customers (whom already trust them). If the average home owner is forced to develop trust in “Point.com” to take part in partial home ownership, it’s going to take 30+ years for much to change in terms of typical home buying experience.
I have to imagine someone will put a marketplace on partial equity opportunities. How cool would it be to be able to search for opportunities in other geographies to stash (aka invest) $5,000? Imagine being able to buy .02%, 2%, or 10% of a property depending on the geography you were buying in.
Bringing partial equity to real estate investing is a likely pre-cursor to bringing partial equity to the average buyer.
Splitting up equity on co-living buildings is a compelling thought. Same with equity in home swapping networks (read Julie’s post).
“Co-buying” is another route to enabling home ownership for a broader demographic — and CoBuy is a startup based here in Seattle taking a different, yet equally interesting, approach to making home ownership possible at lower price points.
For the curios folk, here’s the embedded podcast: