Co-Ownership in California
Executive Summary
This paper aims to explore innovative models to combat California’s ongoing housing affordability crisis, with a particular focus on co-ownership as one viable solution. We examine how these models can not only reduce financial barriers but also contribute to local economies and long-term community investment. Key findings include:
The Rise of Alternative Homeownership Models:
■ Innovative housing models, such as co-ownership, shared equity homeownership, housing cooperatives, and rent-to-own arrangements, are emerging to reduce financial barriers by allowing buyers to share costs and risks, making homeownership more accessible.
■ Notable platforms facilitating these models include:
Pacaso – Enables co-ownership of second homes in vacation markets.
CoBuy – Helps groups of buyers pool resources for home purchases.
Nesterly – Matches older homeowners with younger renters.
HomeRoom – Facilitates roommate matching for affordable rentals.
■ 14% of homebuyers purchased with a friend in 2024, up from 4% in 2022.
■ Google searches for co-ownership increased by 63% over the past decade.
■ 30% of U.S. home sales in recent years involved co-owners.
■ 44% of home loan applications in California now include a co-applicant, up from 37% a decade ago.
■ Co-ownership differs from STRs by offering long-term community investment, ensuring higher property use, and prohibiting short-term renting. And unlike timeshares, it grants true ownership, equity growth, and flexible scheduling.
Tax Benefits and Optimizing Supply:
■ Pacaso homes are utilized 89% of the year, compared to 53% for short-term rentals and 39% for second homes.
■ Higher occupancy leads to more local spending and tax revenue:
Pacaso owners spend $42,555 per year locally, compared to $18,645 for traditional second-home owners.
This generates an additional $1,233 in local tax revenue and $1,076 in state tax revenue per property, or a 128% increase.
■ When high-income buyers opt for co-ownership, more single-family homes are made available for middle-income buyers.
Policy Recommendations:
■ Avoid Regulatory Barriers: Local governments should recognize co-ownership as a distinct housing model rather than classifying it under restrictive short-term rental laws.
■ Define Co-Ownership in State Laws: States should clearly differentiate co-ownership from timeshares and STRs to provide regulatory clarity.
■ Incentivize Co-Ownership for Primary Residences: Tax credits or reduced regulatory barriers could expand the model beyond vacation markets, making homeownership more accessible.
■ Leverage Co-Ownership for Downtown Revitalization: Cities facing office vacancies could convert commercial properties into co-owned residential units, boosting urban economies and struggling downtowns.
■ Streamline Housing Development Approvals: Broader zoning and permitting reforms, similar to those supporting ADUs, could facilitate greater adoption of co-ownership models.