Have you ever visited Florida and wondered what it would be like to live in a luxury waterfront property? Of course luxury waterfront properties are not cheap and are likely out of reach for the average investor. But if you can’t have the whole thing, how about just a piece? Fractional home ownership or co – ownership isn’t anything new, but there seems to be an added interest recently in the co – ownership of luxury properties.
Recent studies reveal that second home or vacation home ownership in North America has been on the rise over the past few years. Start up companies and sites such as Pacaso are opening up a new market for investors interested in owning a fraction of a luxury home. In the case of Pacaso, the company sells fractions of single – family luxury homes to groups of buyers. For example, someone could own one eighth of a luxury multi – million dollar home for the cost of a regular home. Pasco’s CEO Austin Allison says of his business model; “ They create additional inventory and optimize the use of existing housing to help keep up with the demand and improve affordability “.
As the prospect of home ownership has begun to feel increasingly out of reach for many first – time homebuyers in both Canada and the United States, different types of homeownership structures have become popular. According to a recent report in Canada from legal software company Dye and Durham, Canadians are less willing to wait for house prices and interest rates to decrease. As per other reports, interest in second homes and vacation home ownership has also greatly increased since 2020.
Other models of fractional ownership have been propping up including a company backed by Jeff Bezo called Arrive and Fundrise, which received hundreds of millions of dollars in backing from JP Morgan Chase. However, some policymakers are not too happy about these types of ventures as they worry large investment home buying firms and private equity companies consolidating too much of the real estate market is not good for ordinary buyers and renters.
