Second-home solution Pacaso studied 10 of the most active counties in the country for co-ownership and found the trend grew by 21 percent in 2023. The pace of co-owned closings correlates with a rise in Housing Price Index (HPI) in those counties.
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Pacaso, the company that formalized the modern model of co-ownership, found in its inaugural category report that buying a home before marriage, or even when not formally “coupled,” is on the rise, Inman learned in a Feb. 14 press release.
The second-home solution studied 10 of the most active counties in the country for co-ownership and found the trend grew by 21 percent in 2023. The pace of co-owned closings correlates with a rise in the Housing Price Index (HPI) in those counties. The report found that HPI rose 6.8 percent in the areas studied, suggesting that co-ownership is a growing solution for the nation’s problematic affordability issues, a statistic further backed by Zillow’s Consumer Housing Trends report.
Zillow’s research found that its 6,500 surveyed buyers identified affordability as the primary motivation for co-ownership.
“This trend extends beyond regional borders, with robust co-ownership growth observed in diverse states such as Pennsylvania, Maine, West Virginia, Nebraska and Virginia,” Pacaso said.
“Furthermore, the surge in co-ownership is not confined to specific urban or rural housing markets, underscoring its widespread and inclusive presence in the real estate landscape.”
Pacaso’s primary market is second homes in luxury vacation markets. The company invests in a property and then re-sells shares of it to buyers who co-own the home with other shareholders. Naturally, this brings down the price of entry for aspiring vacation homeowners. The tactic consolidates up to eight owners in a single property with set usage periods, allowing fewer nearby homes to become subject to infrequent use or the short-term rental market.
“For those eager to enter the real estate market, high barriers to entry such as high home prices and high mortgage rates often prevent people from making a home purchase,” said Pacaso CEO and co-founder Austin Allison, in a statement. “Co-owning with friends or family offers a solution to lower that barrier and provides a hack for the current affordability crisis sweeping the nation. In our recent report, we affirm that in regions experiencing the highest co-ownership growth, there has also been noteworthy year-over-year growth in home prices.”
The counties examined by Pacaso include Stafford, Hernrico, Fairfax, Greene, Martinsville and Suffolk in Virginia, Morgan County in Utah’s Wasatch Mountains ski corridor, Cass County, North Dakota, Dodge County, Minnesota and Weld County in Colorado, which is outside Denver.
Of the 10 counties, Morgan experienced the most significant growth, 42.7 percent year-over-year. The HPI there climbed by 3.4 percent. This was driven largely by Utah’s growth as a recreation hotbed and nearby Salt Lake’s increasing popularity with a younger, tech-enabled workforce.
Cass County is North Dakota’s most populous, home to Fargo. Its year-over-year co-ownership growth was 21 percent, according to Pacaso. In Minnesota, Dodge County’s uptick was 16 percent, explained by the growth of the Mayo Clinic and the $5 billion campus makeover it has planned.
The report defined co-owned homes as sales “involving various vesting codes and parties as determined through ownership names in public record data, including domestic partners, joint tenants, tenants in common and excludes married couples.”
Pacaso’s 2023 portfolio revenue surpassed $1 billion, according to an annual performance announcement. It has more than 1,500 owners in 40 locations around the world, including Mexico, London, France and Spain. The company’s marketplace, or the resale of shares, grew by 10 percent in 2023, and in November, it reported a 45 percent year-over-year growth of shares sold.
In an interview with Inman, Pacaso’s Senior Vice President of Industry Relations Marnie Blanco said that 2024 will be a year to watch for the company.
“We have a lot of creative financing that we’re able to do. Just recently, we launched a zero percent financing program on many of our homes. A ton of our homes are resales, so they are current Pacaso owners who are reselling their portion of their home and we’re able to do assumable mortgages on those homes as well. Right now, with the crisis of mortgages going on, it’s very appealing not only to agents, because they can extend that to their clients, but to buyers as well.”
Blanco also said the company is launching an agent ambassador program in March. “It’s going to give agents more ways to work with Pacaso, on kind of a local flavor, and something that they’re familiar with. Rather than just bringing us buyers to any of our homes, it’s going to talk to agents a little bit closer to what they’re used to,” she said.
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