This New Real Estate Trend Limits Black Homeownership

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Alyssa Guzik
August 6, 2022

The racial wealth gap that exists in America already makes home buying exceedingly difficult for Black home buyers. The housing shortage and high interest rates post pandemic haven’t helped either. 

Now, we’re facing yet another hurdle.

Fractional homeownership is the new real estate wave hitting the housing market. Its structure is similar to that of a timeshare. In short, instead of owning a whole house, a buyer owns a percentage - or a fraction - of a property.

The market is being bought up by investment companies. Pacaso, Kocomo, Altacasa and others like them buy up homes, turn them into LLCs, and then sell the equity shares between $240,000 and $2.2 million a piece to multiple buyers - as many as 8 people!

At the moment, these companies are MOSTLY focused on vacation homes and investment properties. There are, however, organizations doing the same with single and multi-family homes. So instead of having a permanent home, home buyers get to bring their own personal mementos with them for anywhere from 4-8 weeks.

The housing market has cooled rapidly with the rise of interest rates over 5%. And yet, these investment companies continue to buy up the lower priced properties that are on the market, leaving fewer affordable options for Black buyers.

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