In the co-investing model, companies are part owners of homes. While this arrangement gives potential homebuyers more options, this isn’t a real solution to the country’s housing affordability crisis.
Issi Romem writes about the emergence of the owner-renter hybrid model and ways the pandemic could affect these arrangements and the housing market. "Instead of just lending people money to buy homes, companies are now co-investing with them — in other words, taking an ownership stake in the home. This can take on many different forms, including offering down payment assistance or providing a substitute for home equity loans."
The owner-renter hybrid means that people do not ever gain full ownership of their homes. The idea is not new, Romem says, with similarities to rent-to-own approaches and rent control.
While the owner-renter hybrid might be an appealing option for people facing housing cost challenges, particularly during the pandemic when homeowners may lose their homes, the long-term outcomes do not address housing affordability, Romem says.
"Increasing people’s buying power, even if it emerges from something as significant as giving up on traditional ownership, won’t improve the state of housing affordability. As long as demand is fundamentally strong, building more housing is the only thing that will help," Romem concludes.
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